Correlation Between Duke Energy and Red Electrica
Can any of the company-specific risk be diversified away by investing in both Duke Energy and Red Electrica 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 Red Electrica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and Red Electrica Corporacion, you can compare the effects of market volatilities on Duke Energy and Red Electrica 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 Red Electrica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and Red Electrica.
Diversification Opportunities for Duke Energy and Red Electrica
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Duke and Red is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and Red Electrica Corporacion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Electrica Corporacion 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 Red Electrica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Electrica Corporacion has no effect on the direction of Duke Energy i.e., Duke Energy and Red Electrica go up and down completely randomly.
Pair Corralation between Duke Energy and Red Electrica
Assuming the 90 days trading horizon Duke Energy is expected to generate 0.24 times more return on investment than Red Electrica. However, Duke Energy is 4.1 times less risky than Red Electrica. It trades about 0.09 of its potential returns per unit of risk. Red Electrica Corporacion is currently generating about -0.04 per unit of risk. If you would invest 2,485 in Duke Energy on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Duke Energy or generate 0.72% 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. Red Electrica Corporacion
Performance |
| Timeline |
| Duke Energy |
| Red Electrica Corporacion |
Duke Energy and Red Electrica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and Red Electrica
The main advantage of trading using opposite Duke Energy and Red Electrica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, Red Electrica 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 Red Electrica will offset losses from the drop in Red Electrica's long position.| Duke Energy vs. Centrais Eltricas Brasileiras | Duke Energy vs. Nextera Energy | Duke Energy vs. Consumers Energy | Duke Energy vs. CMS Energy |
| Red Electrica vs. NVIDIA | Red Electrica vs. Blacksky Technology | Red Electrica vs. Crowdstrike Holdings | Red Electrica vs. Cintas |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |