Correlation Between Duke Energy and Public Service
Can any of the company-specific risk be diversified away by investing in both Duke Energy and Public Service 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 Public Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and Public Service Enterprise, you can compare the effects of market volatilities on Duke Energy and Public Service 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 Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and Public Service.
Diversification Opportunities for Duke Energy and Public Service
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Duke and Public is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and Public Service Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service Enterprise 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 Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service Enterprise has no effect on the direction of Duke Energy i.e., Duke Energy and Public Service go up and down completely randomly.
Pair Corralation between Duke Energy and Public Service
Considering the 90-day investment horizon Duke Energy is expected to generate 2.06 times less return on investment than Public Service. But when comparing it to its historical volatility, Duke Energy is 1.11 times less risky than Public Service. It trades about 0.05 of its potential returns per unit of risk. Public Service Enterprise is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,611 in Public Service Enterprise on August 24, 2024 and sell it today you would earn a total of 3,624 from holding Public Service Enterprise or generate 64.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Duke Energy vs. Public Service Enterprise
Performance |
| Timeline |
| Duke Energy |
| Public Service Enterprise |
Duke Energy and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and Public Service
The main advantage of trading using opposite Duke Energy and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service's long position.| Duke Energy vs. Consolidated Edison | Duke Energy vs. Dominion Energy | Duke Energy vs. American Electric Power | Duke Energy vs. Nextera Energy |
| Public Service vs. CenterPoint Energy | Public Service vs. FirstEnergy | Public Service vs. Pinnacle West Capital | Public Service vs. Edison International |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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