Correlation Between Avangrid and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Avangrid and WEC Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Avangrid and WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avangrid and WEC Energy Group, you can compare the effects of market volatilities on Avangrid and WEC Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Avangrid with a short position of WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avangrid and WEC Energy.
Diversification Opportunities for Avangrid and WEC Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avangrid and WEC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Avangrid and WEC Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEC Energy Group and Avangrid is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Avangrid are associated (or correlated) with WEC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEC Energy Group has no effect on the direction of Avangrid i.e., Avangrid and WEC Energy go up and down completely randomly.
Pair Corralation between Avangrid and WEC Energy
Considering the 90-day investment horizon Avangrid is expected to generate 1.21 times less return on investment than WEC Energy. In addition to that, Avangrid is 1.14 times more volatile than WEC Energy Group. It trades about 0.06 of its total potential returns per unit of risk. WEC Energy Group is currently generating about 0.09 per unit of volatility. If you would invest 8,002 in WEC Energy Group on August 24, 2024 and sell it today you would earn a total of 2,094 from holding WEC Energy Group or generate 26.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avangrid vs. WEC Energy Group
Performance |
| Timeline |
| Avangrid |
| WEC Energy Group |
Avangrid and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avangrid and WEC Energy
The main advantage of trading using opposite Avangrid and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avangrid position performs unexpectedly, WEC Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in WEC Energy will offset losses from the drop in WEC Energy's long position.| Avangrid vs. Korea Electric Power | Avangrid vs. Centrais Electricas Brasileiras | Avangrid vs. MGE Energy | Avangrid vs. IDACORP |
| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |