Correlation Between Entergy Texas and Duke Energy
Can any of the company-specific risk be diversified away by investing in both Entergy Texas and Duke Energy 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 Entergy Texas and Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entergy Texas and Duke Energy, you can compare the effects of market volatilities on Entergy Texas and Duke Energy 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 Entergy Texas with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy Texas and Duke Energy.
Diversification Opportunities for Entergy Texas and Duke Energy
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Entergy and Duke is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Entergy Texas and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and Entergy Texas 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 Entergy Texas are associated (or correlated) with Duke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duke Energy has no effect on the direction of Entergy Texas i.e., Entergy Texas and Duke Energy go up and down completely randomly.
Pair Corralation between Entergy Texas and Duke Energy
Assuming the 90 days horizon Entergy Texas is expected to generate 1.33 times more return on investment than Duke Energy. However, Entergy Texas is 1.33 times more volatile than Duke Energy. It trades about 0.04 of its potential returns per unit of risk. Duke Energy is currently generating about 0.05 per unit of risk. If you would invest 2,111 in Entergy Texas on August 24, 2024 and sell it today you would earn a total of 350.00 from holding Entergy Texas or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy Texas vs. Duke Energy
Performance |
| Timeline |
| Entergy Texas |
| Duke Energy |
Entergy Texas and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy Texas and Duke Energy
The main advantage of trading using opposite Entergy Texas and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy Texas position performs unexpectedly, Duke Energy 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 Duke Energy will offset losses from the drop in Duke Energy's long position.The idea behind Entergy Texas and Duke Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Duke Energy vs. Centrais Eltricas Brasileiras | Duke Energy vs. Nextera Energy | Duke Energy vs. Consumers Energy | Duke Energy vs. CMS Energy |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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