Correlation Between Duke Energy and Strats Trust
Can any of the company-specific risk be diversified away by investing in both Duke Energy and Strats Trust 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 Duke Energy and Strats Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy Corp and Strats Trust Cellular, you can compare the effects of market volatilities on Duke Energy and Strats Trust 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 Duke Energy with a short position of Strats Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and Strats Trust.
Diversification Opportunities for Duke Energy and Strats Trust
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Duke and Strats is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy Corp and Strats Trust Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats Trust Cellular and Duke 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 Duke Energy Corp are associated (or correlated) with Strats Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats Trust Cellular has no effect on the direction of Duke Energy i.e., Duke Energy and Strats Trust go up and down completely randomly.
Pair Corralation between Duke Energy and Strats Trust
Given the investment horizon of 90 days Duke Energy Corp is expected to generate 0.89 times more return on investment than Strats Trust. However, Duke Energy Corp is 1.13 times less risky than Strats Trust. It trades about 0.06 of its potential returns per unit of risk. Strats Trust Cellular is currently generating about -0.01 per unit of risk. If you would invest 2,438 in Duke Energy Corp on December 2, 2024 and sell it today you would earn a total of 46.00 from holding Duke Energy Corp or generate 1.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.08% |
Values | Daily Returns |
Duke Energy Corp vs. Strats Trust Cellular
Performance |
Timeline |
Duke Energy Corp |
Strats Trust Cellular |
Duke Energy and Strats Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Duke Energy and Strats Trust
The main advantage of trading using opposite Duke Energy and Strats Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, Strats Trust 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 Strats Trust will offset losses from the drop in Strats Trust's long position.Duke Energy vs. Southern Co | Duke Energy vs. DTE Energy Co | Duke Energy vs. CMS Energy Corp | Duke Energy vs. CMS Energy Corp |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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