Correlation Between Belden and 26442CAM6

Can any of the company-specific risk be diversified away by investing in both Belden and 26442CAM6 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 Belden and 26442CAM6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Belden Inc and DUKE ENERGY CAROLINAS, you can compare the effects of market volatilities on Belden and 26442CAM6 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 Belden with a short position of 26442CAM6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belden and 26442CAM6.

Diversification Opportunities for Belden and 26442CAM6

0.3

Correlation Coefficient

Belden  26442CAM6

Weak diversification

The 3 months correlation between Belden and 26442CAM6 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Belden Inc and DUKE ENERGY CAROLINAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY CAROLINAS and Belden 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 Belden Inc are associated (or correlated) with 26442CAM6. 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 CAROLINAS has no effect on the direction of Belden i.e., Belden and 26442CAM6 go up and down completely randomly.

Pair Corralation between Belden and 26442CAM6

Considering the 90-day investment horizon Belden Inc is expected to generate 2.06 times more return on investment than 26442CAM6. However, Belden is 2.06 times more volatile than DUKE ENERGY CAROLINAS. It trades about 0.05 of its potential returns per unit of risk. DUKE ENERGY CAROLINAS is currently generating about -0.03 per unit of risk. If you would invest  11,650  in Belden Inc on October 25, 2024 and sell it today you would earn a total of  557.00  from holding Belden Inc or generate 4.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.0%
Values	Daily Returns

Belden Inc  vs.  DUKE ENERGY CAROLINAS

Belden Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Belden Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Belden is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY CAROLINAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442CAM6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Belden and 26442CAM6

The main advantage of trading using opposite Belden and 26442CAM6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belden position performs unexpectedly, 26442CAM6 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 26442CAM6 will offset losses from the drop in 26442CAM6's long position.

The idea behind Belden Inc and DUKE ENERGY CAROLINAS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.