Correlation Between ENDESA ADR and WEC Energy
Can any of the company-specific risk be diversified away by investing in both ENDESA ADR 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 ENDESA ADR and WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENDESA ADR 12 and WEC Energy Group, you can compare the effects of market volatilities on ENDESA ADR 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 ENDESA ADR with a short position of WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENDESA ADR and WEC Energy.
Diversification Opportunities for ENDESA ADR and WEC Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENDESA and WEC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ENDESA ADR 12 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 ENDESA ADR 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 ENDESA ADR 12 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 ENDESA ADR i.e., ENDESA ADR and WEC Energy go up and down completely randomly.
Pair Corralation between ENDESA ADR and WEC Energy
Assuming the 90 days trading horizon ENDESA ADR 12 is expected to generate 1.05 times more return on investment than WEC Energy. However, ENDESA ADR is 1.05 times more volatile than WEC Energy Group. It trades about 0.25 of its potential returns per unit of risk. WEC Energy Group is currently generating about 0.0 per unit of risk. If you would invest 925.00 in ENDESA ADR 12 on September 13, 2024 and sell it today you would earn a total of 60.00 from holding ENDESA ADR 12 or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENDESA ADR 12 vs. WEC Energy Group
Performance |
| Timeline |
| ENDESA ADR 12 |
| WEC Energy Group |
ENDESA ADR and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENDESA ADR and WEC Energy
The main advantage of trading using opposite ENDESA ADR and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENDESA ADR 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.| ENDESA ADR vs. Duke Energy | ENDESA ADR vs. WEC Energy Group | ENDESA ADR vs. CMS Energy | ENDESA ADR vs. Terna Rete |
| WEC Energy vs. Duke Energy | WEC Energy vs. ENDESA ADR 12 | WEC Energy vs. CMS Energy | WEC Energy vs. Terna Rete |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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