Correlation Between Spectra Systems and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Spectra Systems 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 Spectra Systems and WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectra Systems and WEC Energy Group, you can compare the effects of market volatilities on Spectra Systems 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 Spectra Systems with a short position of WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectra Systems and WEC Energy.
Diversification Opportunities for Spectra Systems and WEC Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Spectra and WEC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spectra Systems 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 Spectra Systems 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 Spectra Systems 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 Spectra Systems i.e., Spectra Systems and WEC Energy go up and down completely randomly.
Pair Corralation between Spectra Systems and WEC Energy
Given the investment horizon of 90 days Spectra Systems is expected to generate 1.21 times less return on investment than WEC Energy. But when comparing it to its historical volatility, Spectra Systems is 2.56 times less risky than WEC Energy. It trades about 0.08 of its potential returns per unit of risk. WEC Energy Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,617 in WEC Energy Group on September 12, 2024 and sell it today you would earn a total of 1,098 from holding WEC Energy Group or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Spectra Systems vs. WEC Energy Group
Performance |
| Timeline |
| Spectra Systems |
| WEC Energy Group |
Spectra Systems and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectra Systems and WEC Energy
The main advantage of trading using opposite Spectra Systems and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectra Systems 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.| Spectra Systems vs. WEC Energy Group | Spectra Systems vs. NiSource | Spectra Systems vs. Pure Cycle | Spectra Systems vs. Kinetik Holdings |
| WEC Energy vs. Southern Company | WEC Energy vs. Consolidated Edison | WEC Energy vs. Edison International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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