Correlation Between Dow Jones and Duke Energy
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Duke Energy, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Duke Energy.
Diversification Opportunities for Dow Jones and Duke Energy
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Duke is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and Dow Jones 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 Dow Jones Industrial 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 has no effect on the direction of Dow Jones i.e., Dow Jones and Duke Energy go up and down completely randomly.
Pair Corralation between Dow Jones and Duke Energy
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.58 times more return on investment than Duke Energy. However, Dow Jones Industrial is 1.72 times less risky than Duke Energy. It trades about -0.01 of its potential returns per unit of risk. Duke Energy is currently generating about -0.03 per unit of risk. If you would invest 4,395,819 in Dow Jones Industrial on September 14, 2024 and sell it today you would lose (4,407) from holding Dow Jones Industrial or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Duke Energy
Performance |
| Timeline |
Dow Jones and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Duke Energy
Pair trading matchups for Duke Energy
Pair Trading with Dow Jones and Duke Energy
The main advantage of trading using opposite Dow Jones and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| Duke Energy vs. WEC Energy Group | Duke Energy vs. ENDESA ADR 12 | Duke Energy vs. CMS Energy | Duke Energy 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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