Correlation Between Logan Ridge and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Logan Ridge 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 Logan Ridge and WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Logan Ridge Finance and WEC Energy Group, you can compare the effects of market volatilities on Logan Ridge 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 Logan Ridge with a short position of WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Logan Ridge and WEC Energy.
Diversification Opportunities for Logan Ridge and WEC Energy
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Logan and WEC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance 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 Logan Ridge 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 Logan Ridge Finance 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 Logan Ridge i.e., Logan Ridge and WEC Energy go up and down completely randomly.
Pair Corralation between Logan Ridge and WEC Energy
Given the investment horizon of 90 days Logan Ridge Finance is expected to generate 2.0 times more return on investment than WEC Energy. However, Logan Ridge is 2.0 times more volatile than WEC Energy Group. It trades about 0.19 of its potential returns per unit of risk. WEC Energy Group is currently generating about 0.15 per unit of risk. If you would invest 2,121 in Logan Ridge Finance on September 2, 2024 and sell it today you would earn a total of 479.00 from holding Logan Ridge Finance or generate 22.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Logan Ridge Finance vs. WEC Energy Group
Performance |
| Timeline |
| Logan Ridge Finance |
| WEC Energy Group |
Logan Ridge and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Logan Ridge and WEC Energy
The main advantage of trading using opposite Logan Ridge and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logan Ridge 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.| Logan Ridge vs. Badger Infrastructure Solutions | Logan Ridge vs. Portman Ridge Finance | Logan Ridge vs. Inotiv Inc | Logan Ridge vs. Phenixfin |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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