Correlation Between MGE Energy and Duke Energy
Can any of the company-specific risk be diversified away by investing in both MGE Energy 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 MGE Energy and Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGE Energy and Duke Energy, you can compare the effects of market volatilities on MGE Energy 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 MGE Energy with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGE Energy and Duke Energy.
Diversification Opportunities for MGE Energy and Duke Energy
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between MGE and Duke is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding MGE Energy and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and MGE 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 MGE Energy 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 MGE Energy i.e., MGE Energy and Duke Energy go up and down completely randomly.
Pair Corralation between MGE Energy and Duke Energy
Given the investment horizon of 90 days MGE Energy is expected to generate 1.89 times more return on investment than Duke Energy. However, MGE Energy is 1.89 times more volatile than Duke Energy. It trades about 0.32 of its potential returns per unit of risk. Duke Energy is currently generating about 0.11 per unit of risk. If you would invest 9,010 in MGE Energy on September 1, 2024 and sell it today you would earn a total of 1,418 from holding MGE Energy or generate 15.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGE Energy vs. Duke Energy
Performance |
| Timeline |
| MGE Energy |
| Duke Energy |
MGE Energy and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGE Energy and Duke Energy
The main advantage of trading using opposite MGE Energy and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGE Energy 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.| MGE Energy vs. CMS Energy | MGE Energy vs. Ameren Corp | MGE Energy vs. Pinnacle West Capital | MGE Energy vs. Evergy, |
| Duke Energy vs. Consolidated Edison | Duke Energy vs. Dominion Energy | Duke Energy vs. American Electric Power | Duke Energy vs. Nextera 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |