Correlation Between WEC Energy and KeyCorp
Can any of the company-specific risk be diversified away by investing in both WEC Energy and KeyCorp 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 KeyCorp 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 KeyCorp, you can compare the effects of market volatilities on WEC Energy and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and KeyCorp.
Diversification Opportunities for WEC Energy and KeyCorp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WEC and KeyCorp is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of WEC Energy i.e., WEC Energy and KeyCorp go up and down completely randomly.
Pair Corralation between WEC Energy and KeyCorp
Considering the 90-day investment horizon WEC Energy is expected to generate 1.07 times less return on investment than KeyCorp. In addition to that, WEC Energy is 1.0 times more volatile than KeyCorp. It trades about 0.08 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.09 per unit of volatility. If you would invest 1,971 in KeyCorp on September 4, 2024 and sell it today you would earn a total of 490.00 from holding KeyCorp or generate 24.86% 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. KeyCorp
Performance |
| Timeline |
| WEC Energy Group |
| KeyCorp |
WEC Energy and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and KeyCorp
The main advantage of trading using opposite WEC Energy and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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