Correlation Between WEC Energy and Charter Communications
Can any of the company-specific risk be diversified away by investing in both WEC Energy and Charter Communications 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 Charter Communications 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 Charter Communications, you can compare the effects of market volatilities on WEC Energy and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and Charter Communications.
Diversification Opportunities for WEC Energy and Charter Communications
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WEC and Charter is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of WEC Energy i.e., WEC Energy and Charter Communications go up and down completely randomly.
Pair Corralation between WEC Energy and Charter Communications
Assuming the 90 days horizon WEC Energy Group is expected to generate 1.22 times more return on investment than Charter Communications. However, WEC Energy is 1.22 times more volatile than Charter Communications. It trades about 0.24 of its potential returns per unit of risk. Charter Communications is currently generating about -0.01 per unit of risk. If you would invest 8,906 in WEC Energy Group on October 20, 2024 and sell it today you would earn a total of 614.00 from holding WEC Energy Group or generate 6.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEC Energy Group vs. Charter Communications
Performance |
| Timeline |
| WEC Energy Group |
| Charter Communications |
WEC Energy and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and Charter Communications
The main advantage of trading using opposite WEC Energy and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| WEC Energy vs. Charter Communications | WEC Energy vs. Chengdu PUTIAN Telecommunications | WEC Energy vs. TELECOM ITALIA | WEC Energy vs. Cleanaway Waste Management |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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