Correlation Between WEC Energy and American Education

Can any of the company-specific risk be diversified away by investing in both WEC Energy and American Education 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 American Education 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 American Education Center, you can compare the effects of market volatilities on WEC Energy and American Education 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 American Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and American Education.

Diversification Opportunities for WEC Energy and American Education

-0.15

Correlation Coefficient

WEC Energy  American Education

Good diversification

The 3 months correlation between WEC and American is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and American Education Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Education Center 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 American Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Education Center has no effect on the direction of WEC Energy i.e., WEC Energy and American Education go up and down completely randomly.

Pair Corralation between WEC Energy and American Education

Considering the 90-day investment horizon WEC Energy Group is expected to generate 0.07 times more return on investment than American Education. However, WEC Energy Group is 14.58 times less risky than American Education. It trades about 0.02 of its potential returns per unit of risk. American Education Center is currently generating about -0.17 per unit of risk. If you would invest  8,786  in WEC Energy Group on September 12, 2024 and sell it today you would earn a total of  929.00  from holding WEC Energy Group or generate 10.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	6.67%
Values	Daily Returns

WEC Energy Group  vs.  American Education Center

WEC Energy Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WEC Energy Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, WEC Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

American Education Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Education Center has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, American Education is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WEC Energy and American Education

The main advantage of trading using opposite WEC Energy and American Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy position performs unexpectedly, American Education 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 American Education will offset losses from the drop in American Education's long position.

The idea behind WEC Energy Group and American Education Center pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..