Correlation Between WEC Energy and First Ship
Can any of the company-specific risk be diversified away by investing in both WEC Energy and First Ship 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 First Ship 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 First Ship Lease, you can compare the effects of market volatilities on WEC Energy and First Ship 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 First Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and First Ship.
Diversification Opportunities for WEC Energy and First Ship
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WEC and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and First Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ship Lease 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 First Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ship Lease has no effect on the direction of WEC Energy i.e., WEC Energy and First Ship go up and down completely randomly.
Pair Corralation between WEC Energy and First Ship
Considering the 90-day investment horizon WEC Energy is expected to generate 3.58 times less return on investment than First Ship. But when comparing it to its historical volatility, WEC Energy Group is 2.29 times less risky than First Ship. It trades about 0.03 of its potential returns per unit of risk. First Ship Lease is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2.50 in First Ship Lease on August 29, 2024 and sell it today you would earn a total of 1.50 from holding First Ship Lease or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEC Energy Group vs. First Ship Lease
Performance |
| Timeline |
| WEC Energy Group |
| First Ship Lease |
WEC Energy and First Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and First Ship
The main advantage of trading using opposite WEC Energy and First Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, First Ship 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 First Ship will offset losses from the drop in First Ship's long position.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
| First Ship vs. Kinetik Holdings | First Ship vs. Century Aluminum | First Ship vs. ArcelorMittal SA ADR | First Ship vs. WEC Energy Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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