Correlation Between WEC Energy and Duke Energy
Can any of the company-specific risk be diversified away by investing in both WEC Energy and Duke 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 WEC Energy and Duke Energy 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 Duke Energy, you can compare the effects of market volatilities on WEC Energy and Duke 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 WEC Energy with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and Duke Energy.
Diversification Opportunities for WEC Energy and Duke Energy
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WEC and Duke is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy 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 Duke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duke Energy has no effect on the direction of WEC Energy i.e., WEC Energy and Duke Energy go up and down completely randomly.
Pair Corralation between WEC Energy and Duke Energy
Considering the 90-day investment horizon WEC Energy Group is expected to under-perform the Duke Energy. But the stock apears to be less risky and, when comparing its historical volatility, WEC Energy Group is 1.12 times less risky than Duke Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Duke Energy is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 11,082 in Duke Energy on September 13, 2024 and sell it today you would lose (123.00) from holding Duke Energy or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEC Energy Group vs. Duke Energy
Performance |
| Timeline |
| WEC Energy Group |
| Duke Energy |
WEC Energy and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and Duke Energy
The main advantage of trading using opposite WEC Energy and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, Duke 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 Duke Energy will offset losses from the drop in Duke Energy's long position.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
| Duke Energy vs. Consolidated Edison | Duke Energy vs. Dominion Energy | Duke Energy vs. American Electric Power | Duke Energy vs. Nextera Energy |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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