Correlation Between Centrais Electricas and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Centrais Electricas 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 Centrais Electricas and WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrais Electricas Brasileiras and WEC Energy Group, you can compare the effects of market volatilities on Centrais Electricas 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 Centrais Electricas with a short position of WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Electricas and WEC Energy.
Diversification Opportunities for Centrais Electricas and WEC Energy
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Centrais and WEC is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Electricas Brasileira 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 Centrais Electricas 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 Centrais Electricas Brasileiras 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 Centrais Electricas i.e., Centrais Electricas and WEC Energy go up and down completely randomly.
Pair Corralation between Centrais Electricas and WEC Energy
Considering the 90-day investment horizon Centrais Electricas Brasileiras is expected to under-perform the WEC Energy. In addition to that, Centrais Electricas is 1.63 times more volatile than WEC Energy Group. It trades about -0.22 of its total potential returns per unit of risk. WEC Energy Group is currently generating about 0.24 per unit of volatility. If you would invest 9,617 in WEC Energy Group on August 28, 2024 and sell it today you would earn a total of 518.00 from holding WEC Energy Group or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Electricas Brasileira vs. WEC Energy Group
Performance |
| Timeline |
| Centrais Electricas |
| WEC Energy Group |
Centrais Electricas and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Electricas and WEC Energy
The main advantage of trading using opposite Centrais Electricas and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Electricas 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.| Centrais Electricas vs. Genie Energy | Centrais Electricas vs. Central Puerto SA | Centrais Electricas vs. Korea Electric Power | Centrais Electricas vs. Empresa Distribuidora y |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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