Correlation Between WEC Energy and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both WEC Energy and Plexus Corp 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 Plexus Corp 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 Plexus Corp, you can compare the effects of market volatilities on WEC Energy and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and Plexus Corp.
Diversification Opportunities for WEC Energy and Plexus Corp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WEC and Plexus is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of WEC Energy i.e., WEC Energy and Plexus Corp go up and down completely randomly.
Pair Corralation between WEC Energy and Plexus Corp
Considering the 90-day investment horizon WEC Energy is expected to generate 1.6 times less return on investment than Plexus Corp. But when comparing it to its historical volatility, WEC Energy Group is 2.81 times less risky than Plexus Corp. It trades about 0.33 of its potential returns per unit of risk. Plexus Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 14,658 in Plexus Corp on August 31, 2024 and sell it today you would earn a total of 1,575 from holding Plexus Corp or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEC Energy Group vs. Plexus Corp
Performance |
| Timeline |
| WEC Energy Group |
| Plexus Corp |
WEC Energy and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and Plexus Corp
The main advantage of trading using opposite WEC Energy and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
| Plexus Corp vs. Sanmina | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Celestica | Plexus Corp vs. CTS Corporation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |