Correlation Between Duke Energy and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both Duke Energy and Consolidated Edison 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 Consolidated Edison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and Consolidated Edison, you can compare the effects of market volatilities on Duke Energy and Consolidated Edison 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 Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and Consolidated Edison.
Diversification Opportunities for Duke Energy and Consolidated Edison
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Duke and Consolidated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison 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 Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of Duke Energy i.e., Duke Energy and Consolidated Edison go up and down completely randomly.
Pair Corralation between Duke Energy and Consolidated Edison
Considering the 90-day investment horizon Duke Energy is expected to generate 1.0 times more return on investment than Consolidated Edison. However, Duke Energy is 1.0 times less risky than Consolidated Edison. It trades about 0.14 of its potential returns per unit of risk. Consolidated Edison is currently generating about 0.08 per unit of risk. If you would invest 8,923 in Duke Energy on August 27, 2024 and sell it today you would earn a total of 2,547 from holding Duke Energy or generate 28.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duke Energy vs. Consolidated Edison
Performance |
| Timeline |
| Duke Energy |
| Consolidated Edison |
Duke Energy and Consolidated Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and Consolidated Edison
The main advantage of trading using opposite Duke Energy and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, Consolidated Edison 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 Consolidated Edison will offset losses from the drop in Consolidated Edison's long position.| Duke Energy vs. Consolidated Edison | Duke Energy vs. Dominion Energy | Duke Energy vs. American Electric Power | Duke Energy vs. Nextera Energy |
| Consolidated Edison vs. Entergy | Consolidated Edison vs. Ameren Corp | Consolidated Edison vs. Alliant Energy Corp | Consolidated Edison vs. Pinnacle West Capital |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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