Correlation Between Bank Of and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Bank Of 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 Bank Of and WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Bank of and WEC Energy Group, you can compare the effects of market volatilities on Bank Of 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 Bank Of with a short position of WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of and WEC Energy.
Diversification Opportunities for Bank Of and WEC Energy
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and WEC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of 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 Bank Of 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 The Bank of 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 Bank Of i.e., Bank Of and WEC Energy go up and down completely randomly.
Pair Corralation between Bank Of and WEC Energy
Assuming the 90 days horizon The Bank of is expected to generate 1.38 times more return on investment than WEC Energy. However, Bank Of is 1.38 times more volatile than WEC Energy Group. It trades about 0.2 of its potential returns per unit of risk. WEC Energy Group is currently generating about 0.18 per unit of risk. If you would invest 5,336 in The Bank of on September 12, 2024 and sell it today you would earn a total of 2,288 from holding The Bank of or generate 42.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. WEC Energy Group
Performance |
| Timeline |
| The Bank |
| WEC Energy Group |
Bank Of and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Of and WEC Energy
The main advantage of trading using opposite Bank Of and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of 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.| Bank Of vs. ULTRA CLEAN HLDGS | Bank Of vs. THAI BEVERAGE | Bank Of vs. Thai Beverage Public | Bank Of vs. Perseus Mining Limited |
| WEC Energy vs. Nippon Steel | WEC Energy vs. ALGOMA STEEL GROUP | WEC Energy vs. ITALIAN WINE BRANDS | WEC Energy vs. RELIANCE STEEL AL |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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