Correlation Between PPL and Duke Energy
Can any of the company-specific risk be diversified away by investing in both PPL 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 PPL and Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPL Corporation and Duke Energy, you can compare the effects of market volatilities on PPL 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 PPL with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPL and Duke Energy.
Diversification Opportunities for PPL and Duke Energy
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between PPL and Duke is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding PPL Corp. and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and PPL 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 PPL Corporation 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 PPL i.e., PPL and Duke Energy go up and down completely randomly.
Pair Corralation between PPL and Duke Energy
Considering the 90-day investment horizon PPL Corporation is expected to generate 1.02 times more return on investment than Duke Energy. However, PPL is 1.02 times more volatile than Duke Energy. It trades about 0.05 of its potential returns per unit of risk. Duke Energy is currently generating about 0.05 per unit of risk. If you would invest 2,717 in PPL Corporation on August 30, 2024 and sell it today you would earn a total of 783.00 from holding PPL Corporation or generate 28.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPL Corp. vs. Duke Energy
Performance |
| Timeline |
| PPL Corporation |
| Duke Energy |
PPL and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPL and Duke Energy
The main advantage of trading using opposite PPL and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPL 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 PPL Corporation 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. 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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