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

0.03

Correlation Coefficient

Duke Energy  Strats Trust

Significant diversification

The 3 months correlation between Duke and Strats is 0.03. 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 0.74 times more return on investment than Strats Trust. However, Duke Energy Corp is 1.35 times less risky than Strats Trust. It trades about 0.11 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  2,368  in Duke Energy Corp on December 27, 2024 and sell it today you would earn a total of  89.00  from holding Duke Energy Corp or generate 3.76% return on investment over 90 days.

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

Duke Energy Corp  vs.  Strats Trust Cellular

Duke Energy Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duke Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. 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.

Strats Trust Cellular

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strats Trust Cellular has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, Strats Trust is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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.

The idea behind Duke Energy Corp and Strats Trust Cellular 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.