Correlation Between WEC Energy and Encore Capital
Can any of the company-specific risk be diversified away by investing in both WEC Energy and Encore Capital 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 Encore Capital 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 Encore Capital Group, you can compare the effects of market volatilities on WEC Energy and Encore Capital 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 Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and Encore Capital.
Diversification Opportunities for WEC Energy and Encore Capital
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WEC and Encore is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Encore Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Capital Group 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 Encore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Capital Group has no effect on the direction of WEC Energy i.e., WEC Energy and Encore Capital go up and down completely randomly.
Pair Corralation between WEC Energy and Encore Capital
Considering the 90-day investment horizon WEC Energy is expected to generate 1.47 times less return on investment than Encore Capital. But when comparing it to its historical volatility, WEC Energy Group is 1.78 times less risky than Encore Capital. It trades about 0.28 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,534 in Encore Capital Group on September 4, 2024 and sell it today you would earn a total of 390.00 from holding Encore Capital Group or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEC Energy Group vs. Encore Capital Group
Performance |
| Timeline |
| WEC Energy Group |
| Encore Capital Group |
WEC Energy and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and Encore Capital
The main advantage of trading using opposite WEC Energy and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, Encore Capital 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 Encore Capital will offset losses from the drop in Encore Capital's long position.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
| Encore Capital vs. Guild Holdings Co | Encore Capital vs. Mr Cooper Group | Encore Capital vs. CNFinance Holdings | Encore Capital vs. Security National Financial |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |