Correlation Between Nextera Energy and Wisconsin Electric
Can any of the company-specific risk be diversified away by investing in both Nextera Energy and Wisconsin 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 Nextera Energy and Wisconsin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextera Energy and Wisconsin Electric Power, you can compare the effects of market volatilities on Nextera Energy and Wisconsin 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 Nextera Energy with a short position of Wisconsin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and Wisconsin Electric.
Diversification Opportunities for Nextera Energy and Wisconsin Electric
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nextera and Wisconsin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy and Wisconsin Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wisconsin Electric Power and Nextera 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 Nextera Energy are associated (or correlated) with Wisconsin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wisconsin Electric Power has no effect on the direction of Nextera Energy i.e., Nextera Energy and Wisconsin Electric go up and down completely randomly.
Pair Corralation between Nextera Energy and Wisconsin Electric
Assuming the 90 days trading horizon Nextera Energy is expected to under-perform the Wisconsin Electric. In addition to that, Nextera Energy is 1.68 times more volatile than Wisconsin Electric Power. It trades about -0.07 of its total potential returns per unit of risk. Wisconsin Electric Power is currently generating about 0.05 per unit of volatility. If you would invest 6,533 in Wisconsin Electric Power on September 15, 2024 and sell it today you would earn a total of 207.00 from holding Wisconsin Electric Power or generate 3.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nextera Energy vs. Wisconsin Electric Power
Performance |
Timeline |
Nextera Energy |
Wisconsin Electric Power |
Nextera Energy and Wisconsin Electric Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nextera Energy and Wisconsin Electric
The main advantage of trading using opposite Nextera Energy and Wisconsin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy position performs unexpectedly, Wisconsin 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 Wisconsin Electric will offset losses from the drop in Wisconsin Electric's long position.Nextera Energy vs. Neogen | Nextera Energy vs. HUTCHMED DRC | Nextera Energy vs. Nasdaq Inc | Nextera Energy vs. Sonida Senior Living |
Wisconsin Electric vs. Nextera Energy | Wisconsin Electric vs. Centrais Eltricas Brasileiras | Wisconsin Electric vs. Consumers Energy | Wisconsin Electric vs. Pacific Gas and |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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