Correlation Between Duke Energy and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Duke Energy and NSTAR Electric 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 NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and NSTAR Electric, you can compare the effects of market volatilities on Duke Energy and NSTAR Electric 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 NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and NSTAR Electric.
Diversification Opportunities for Duke Energy and NSTAR Electric
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Duke and NSTAR is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric 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 NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Duke Energy i.e., Duke Energy and NSTAR Electric go up and down completely randomly.
Pair Corralation between Duke Energy and NSTAR Electric
Considering the 90-day investment horizon Duke Energy is expected to generate 0.98 times more return on investment than NSTAR Electric. However, Duke Energy is 1.02 times less risky than NSTAR Electric. It trades about 0.12 of its potential returns per unit of risk. NSTAR Electric is currently generating about 0.09 per unit of risk. If you would invest 10,128 in Duke Energy on September 3, 2024 and sell it today you would earn a total of 1,577 from holding Duke Energy or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Duke Energy vs. NSTAR Electric
Performance |
| Timeline |
| Duke Energy |
| NSTAR Electric |
Duke Energy and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and NSTAR Electric
The main advantage of trading using opposite Duke Energy and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.| Duke Energy vs. Consolidated Edison | Duke Energy vs. Dominion Energy | Duke Energy vs. American Electric Power | Duke Energy vs. Nextera Energy |
| NSTAR Electric vs. Integrated Drilling Equipment | NSTAR Electric vs. Nabors Industries | NSTAR Electric vs. AmTrust Financial Services | NSTAR Electric vs. Chiba Bank Ltd |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |