Correlation Between 26442RAD3 and Ardelyx

Can any of the company-specific risk be diversified away by investing in both 26442RAD3 and Ardelyx 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 26442RAD3 and Ardelyx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DUKE ENERGY PROGRESS and Ardelyx, you can compare the effects of market volatilities on 26442RAD3 and Ardelyx 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 26442RAD3 with a short position of Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26442RAD3 and Ardelyx.

Diversification Opportunities for 26442RAD3 and Ardelyx

0.63

Correlation Coefficient

26442RAD3  Ardelyx

Poor diversification

The 3 months correlation between 26442RAD3 and Ardelyx is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding DUKE ENERGY PROGRESS and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and 26442RAD3 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 PROGRESS are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of 26442RAD3 i.e., 26442RAD3 and Ardelyx go up and down completely randomly.

Pair Corralation between 26442RAD3 and Ardelyx

Assuming the 90 days trading horizon DUKE ENERGY PROGRESS is expected to under-perform the Ardelyx. But the bond apears to be less risky and, when comparing its historical volatility, DUKE ENERGY PROGRESS is 4.16 times less risky than Ardelyx. The bond trades about -0.13 of its potential returns per unit of risk. The Ardelyx is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  527.00  in Ardelyx on October 10, 2024 and sell it today you would earn a total of  14.00  from holding Ardelyx or generate 2.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

DUKE ENERGY PROGRESS  vs.  Ardelyx

DUKE ENERGY PROGRESS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY PROGRESS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442RAD3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ardelyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardelyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Ardelyx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 26442RAD3 and Ardelyx

The main advantage of trading using opposite 26442RAD3 and Ardelyx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26442RAD3 position performs unexpectedly, Ardelyx 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 Ardelyx will offset losses from the drop in Ardelyx's long position.

The idea behind DUKE ENERGY PROGRESS and Ardelyx 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.