Correlation Between Duke Energy and Pacific Gas
Can any of the company-specific risk be diversified away by investing in both Duke Energy and Pacific Gas 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 Pacific Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and Pacific Gas and, you can compare the effects of market volatilities on Duke Energy and Pacific Gas 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 Pacific Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and Pacific Gas.
Diversification Opportunities for Duke Energy and Pacific Gas
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Duke and Pacific is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and Pacific Gas and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Gas 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 Pacific Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Gas has no effect on the direction of Duke Energy i.e., Duke Energy and Pacific Gas go up and down completely randomly.
Pair Corralation between Duke Energy and Pacific Gas
Assuming the 90 days trading horizon Duke Energy is expected to generate 0.44 times more return on investment than Pacific Gas. However, Duke Energy is 2.28 times less risky than Pacific Gas. It trades about 0.02 of its potential returns per unit of risk. Pacific Gas and is currently generating about -0.1 per unit of risk. If you would invest 2,488 in Duke Energy on August 31, 2024 and sell it today you would earn a total of 5.00 from holding Duke Energy or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duke Energy vs. Pacific Gas and
Performance |
| Timeline |
| Duke Energy |
| Pacific Gas |
Duke Energy and Pacific Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and Pacific Gas
The main advantage of trading using opposite Duke Energy and Pacific Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, Pacific Gas 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 Pacific Gas will offset losses from the drop in Pacific Gas' long position.| Duke Energy vs. Centrais Eltricas Brasileiras | Duke Energy vs. Nextera Energy | Duke Energy vs. Consumers Energy | Duke Energy vs. CMS Energy |
| Pacific Gas vs. Nextera Energy | Pacific Gas vs. Duke Energy | Pacific Gas vs. PGE Corp | Pacific Gas vs. Southern Company |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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