Correlation Between WEC Energy and Talon Energy
Can any of the company-specific risk be diversified away by investing in both WEC Energy and Talon 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 Talon 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 Talon Energy, you can compare the effects of market volatilities on WEC Energy and Talon 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 Talon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and Talon Energy.
Diversification Opportunities for WEC Energy and Talon Energy
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WEC and Talon is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Talon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon 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 Talon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon Energy has no effect on the direction of WEC Energy i.e., WEC Energy and Talon Energy go up and down completely randomly.
Pair Corralation between WEC Energy and Talon Energy
If you would invest 8,480 in WEC Energy Group on September 4, 2024 and sell it today you would earn a total of 1,486 from holding WEC Energy Group or generate 17.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 7.77% |
| Values | Daily Returns |
WEC Energy Group vs. Talon Energy
Performance |
| Timeline |
| WEC Energy Group |
| Talon Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WEC Energy and Talon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and Talon Energy
The main advantage of trading using opposite WEC Energy and Talon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, Talon 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 Talon Energy will offset losses from the drop in Talon Energy's long position.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
| Talon Energy vs. Grocery Outlet Holding | Talon Energy vs. Sea | Talon Energy vs. JJill Inc | Talon Energy vs. Tradeweb Markets |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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