Correlation Between Duke Energy and ENDESA ADR
Can any of the company-specific risk be diversified away by investing in both Duke Energy and ENDESA ADR 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 ENDESA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and ENDESA ADR 12, you can compare the effects of market volatilities on Duke Energy and ENDESA ADR 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 ENDESA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and ENDESA ADR.
Diversification Opportunities for Duke Energy and ENDESA ADR
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Duke and ENDESA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and ENDESA ADR 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDESA ADR 12 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 are associated (or correlated) with ENDESA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDESA ADR 12 has no effect on the direction of Duke Energy i.e., Duke Energy and ENDESA ADR go up and down completely randomly.
Pair Corralation between Duke Energy and ENDESA ADR
Assuming the 90 days trading horizon Duke Energy is expected to under-perform the ENDESA ADR. But the stock apears to be less risky and, when comparing its historical volatility, Duke Energy is 1.22 times less risky than ENDESA ADR. The stock trades about -0.04 of its potential returns per unit of risk. The ENDESA ADR 12 is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 925.00 in ENDESA ADR 12 on September 13, 2024 and sell it today you would earn a total of 60.00 from holding ENDESA ADR 12 or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duke Energy vs. ENDESA ADR 12
Performance |
| Timeline |
| Duke Energy |
| ENDESA ADR 12 |
Duke Energy and ENDESA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and ENDESA ADR
The main advantage of trading using opposite Duke Energy and ENDESA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, ENDESA ADR 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 ENDESA ADR will offset losses from the drop in ENDESA ADR's long position.| Duke Energy vs. WEC Energy Group | Duke Energy vs. ENDESA ADR 12 | Duke Energy vs. CMS Energy | Duke Energy vs. Terna Rete |
| ENDESA ADR vs. Duke Energy | ENDESA ADR vs. WEC Energy Group | ENDESA ADR vs. CMS Energy | ENDESA ADR vs. Terna Rete |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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