Correlation Between United States and Duke Energy

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

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

Diversification Opportunities for United States and Duke Energy

-0.11

Correlation Coefficient

United States  Duke Energy

Good diversification

The 3 months correlation between United and Duke is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding United States Cellular and Duke Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy Corp and United States 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 United States Cellular 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 Corp has no effect on the direction of United States i.e., United States and Duke Energy go up and down completely randomly.

Pair Corralation between United States and Duke Energy

Considering the 90-day investment horizon United States Cellular is expected to generate 3.13 times more return on investment than Duke Energy. However, United States is 3.13 times more volatile than Duke Energy Corp. It trades about 0.05 of its potential returns per unit of risk. Duke Energy Corp is currently generating about 0.02 per unit of risk. If you would invest  1,469  in United States Cellular on October 12, 2024 and sell it today you would earn a total of  751.00  from holding United States Cellular or generate 51.12% return on investment over 90 days.

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

United States Cellular  vs.  Duke Energy Corp

United States Cellular

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, United States is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Duke Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duke Energy Corp 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United States and Duke Energy

The main advantage of trading using opposite United States and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Cellular and Duke Energy Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.