Correlation Between Wisconsin Electric and Union Electric
Can any of the company-specific risk be diversified away by investing in both Wisconsin Electric and Union Electric 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 Wisconsin Electric and Union Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wisconsin Electric Power and Union Electric, you can compare the effects of market volatilities on Wisconsin Electric and Union Electric 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 Wisconsin Electric with a short position of Union Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisconsin Electric and Union Electric.
Diversification Opportunities for Wisconsin Electric and Union Electric
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wisconsin and Union is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wisconsin Electric Power and Union Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Electric and Wisconsin Electric 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 Wisconsin Electric Power are associated (or correlated) with Union Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Electric has no effect on the direction of Wisconsin Electric i.e., Wisconsin Electric and Union Electric go up and down completely randomly.
Pair Corralation between Wisconsin Electric and Union Electric
Assuming the 90 days horizon Wisconsin Electric is expected to generate 1.33 times less return on investment than Union Electric. In addition to that, Wisconsin Electric is 1.79 times more volatile than Union Electric. It trades about 0.06 of its total potential returns per unit of risk. Union Electric is currently generating about 0.15 per unit of volatility. If you would invest 6,014 in Union Electric on September 3, 2024 and sell it today you would earn a total of 486.00 from holding Union Electric or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 39.3% |
| Values | Daily Returns |
Wisconsin Electric Power vs. Union Electric
Performance |
| Timeline |
| Wisconsin Electric Power |
| Union Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Wisconsin Electric and Union Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wisconsin Electric and Union Electric
The main advantage of trading using opposite Wisconsin Electric and Union Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wisconsin Electric position performs unexpectedly, Union Electric 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 Union Electric will offset losses from the drop in Union Electric's long position.| Wisconsin Electric vs. Union Electric | Wisconsin Electric vs. Xcel Energy | Wisconsin Electric vs. Alliant Energy Corp | Wisconsin Electric vs. Entergy |
| Union Electric vs. IDACORP | Union Electric vs. Pinnacle West Capital | Union Electric vs. Portland General Electric | Union Electric vs. CMS Energy |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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