Correlation Between ACRES Commercial and Duke Energy

Can any of the company-specific risk be diversified away by investing in both ACRES Commercial and Duke 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 ACRES Commercial and Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ACRES Commercial Realty and Duke Energy, you can compare the effects of market volatilities on ACRES Commercial and Duke 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 ACRES Commercial with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACRES Commercial and Duke Energy.

Diversification Opportunities for ACRES Commercial and Duke Energy

-0.31

Correlation Coefficient

ACRES Commercial  Duke Energy

Very good diversification

The 3 months correlation between ACRES and Duke is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ACRES Commercial Realty and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and ACRES Commercial 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 ACRES Commercial Realty are associated (or correlated) with Duke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duke Energy has no effect on the direction of ACRES Commercial i.e., ACRES Commercial and Duke Energy go up and down completely randomly.

Pair Corralation between ACRES Commercial and Duke Energy

Assuming the 90 days trading horizon ACRES Commercial Realty is expected to generate 0.49 times more return on investment than Duke Energy. However, ACRES Commercial Realty is 2.06 times less risky than Duke Energy. It trades about 0.1 of its potential returns per unit of risk. Duke Energy is currently generating about -0.22 per unit of risk. If you would invest  2,510  in ACRES Commercial Realty on September 28, 2024 and sell it today you would earn a total of  9.00  from holding ACRES Commercial Realty or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ACRES Commercial Realty  vs.  Duke Energy

ACRES Commercial Realty

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACRES Commercial Realty are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ACRES Commercial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Duke Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duke Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Duke Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ACRES Commercial and Duke Energy

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

The idea behind ACRES Commercial Realty and Duke Energy 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.