Correlation Between Duke Energy and Southern Company
Can any of the company-specific risk be diversified away by investing in both Duke Energy and Southern Company 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 Southern Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy Corp and Southern Company Series, you can compare the effects of market volatilities on Duke Energy and Southern Company 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 Southern Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and Southern Company.
Diversification Opportunities for Duke Energy and Southern Company
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Duke and Southern is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy Corp and Southern Company Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Company 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 Corp are associated (or correlated) with Southern Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Company has no effect on the direction of Duke Energy i.e., Duke Energy and Southern Company go up and down completely randomly.
Pair Corralation between Duke Energy and Southern Company
Given the investment horizon of 90 days Duke Energy Corp is expected to generate 0.49 times more return on investment than Southern Company. However, Duke Energy Corp is 2.05 times less risky than Southern Company. It trades about -0.12 of its potential returns per unit of risk. Southern Company Series is currently generating about -0.23 per unit of risk. If you would invest 2,514 in Duke Energy Corp on August 31, 2024 and sell it today you would lose (32.00) from holding Duke Energy Corp or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duke Energy Corp vs. Southern Company Series
Performance |
| Timeline |
| Duke Energy Corp |
| Southern Company |
Duke Energy and Southern Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and Southern Company
The main advantage of trading using opposite Duke Energy and Southern Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, Southern Company 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 Southern Company will offset losses from the drop in Southern Company's long position.| Duke Energy vs. Southern Co | Duke Energy vs. DTE Energy Co | Duke Energy vs. CMS Energy Corp | Duke Energy vs. CMS Energy Corp |
| Southern Company vs. Southern Co | Southern Company vs. DTE Energy | Southern Company vs. Southern Co | Southern Company vs. Prudential Financial 4125 |
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
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |