Correlation Between Union Electric and Wisconsin Electric
Can any of the company-specific risk be diversified away by investing in both Union Electric and Wisconsin Electric 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 Union Electric and Wisconsin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Electric and Wisconsin Electric Power, you can compare the effects of market volatilities on Union Electric and Wisconsin Electric 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 Union Electric with a short position of Wisconsin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Electric and Wisconsin Electric.
Diversification Opportunities for Union Electric and Wisconsin Electric
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Union and Wisconsin is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Union Electric and Wisconsin Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wisconsin Electric Power and Union Electric 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 Union Electric are associated (or correlated) with Wisconsin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wisconsin Electric Power has no effect on the direction of Union Electric i.e., Union Electric and Wisconsin Electric go up and down completely randomly.
Pair Corralation between Union Electric and Wisconsin Electric
Assuming the 90 days horizon Union Electric is expected to generate 3.19 times more return on investment than Wisconsin Electric. However, Union Electric is 3.19 times more volatile than Wisconsin Electric Power. It trades about 0.07 of its potential returns per unit of risk. Wisconsin Electric Power is currently generating about 0.14 per unit of risk. If you would invest 8,347 in Union Electric on September 2, 2024 and sell it today you would earn a total of 2,653 from holding Union Electric or generate 31.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 39.13% |
| Values | Daily Returns |
Union Electric vs. Wisconsin Electric Power
Performance |
| Timeline |
| Union Electric |
| Wisconsin Electric Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Union Electric and Wisconsin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Electric and Wisconsin Electric
The main advantage of trading using opposite Union Electric and Wisconsin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Electric position performs unexpectedly, Wisconsin Electric 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 Wisconsin Electric will offset losses from the drop in Wisconsin Electric's long position.| Union Electric vs. FormFactor | Union Electric vs. United Parks Resorts | Union Electric vs. Entegris | Union Electric vs. Canlan Ice Sports |
| Wisconsin Electric vs. Wisconsin Electric Power | Wisconsin Electric vs. Union Electric | Wisconsin Electric vs. Southern California Gas | Wisconsin Electric vs. Southern California Gas |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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