Correlation Between WEC Energy and Capital One
Can any of the company-specific risk be diversified away by investing in both WEC Energy and Capital One 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 WEC Energy and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WEC Energy Group and Capital One Financial, you can compare the effects of market volatilities on WEC Energy and Capital One 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 WEC Energy with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and Capital One.
Diversification Opportunities for WEC Energy and Capital One
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WEC and Capital is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial and WEC Energy 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 WEC Energy Group are associated (or correlated) with Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of WEC Energy i.e., WEC Energy and Capital One go up and down completely randomly.
Pair Corralation between WEC Energy and Capital One
Considering the 90-day investment horizon WEC Energy Group is expected to generate 1.02 times more return on investment than Capital One. However, WEC Energy is 1.02 times more volatile than Capital One Financial. It trades about 0.19 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.06 per unit of risk. If you would invest 7,956 in WEC Energy Group on September 3, 2024 and sell it today you would earn a total of 2,010 from holding WEC Energy Group or generate 25.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEC Energy Group vs. Capital One Financial
Performance |
| Timeline |
| WEC Energy Group |
| Capital One Financial |
WEC Energy and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and Capital One
The main advantage of trading using opposite WEC Energy and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
| Capital One vs. Boston Beer | Capital One vs. Mind Medicine | Capital One vs. Tarsus Pharmaceuticals | Capital One vs. Oatly Group AB |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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