Correlation Between Visa and Duke Energy
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Duke Energy Corp, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Duke Energy.
Diversification Opportunities for Visa and Duke Energy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Duke is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Duke Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy Corp and Visa 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 Visa Class A 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 Corp has no effect on the direction of Visa i.e., Visa and Duke Energy go up and down completely randomly.
Pair Corralation between Visa and Duke Energy
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Duke Energy. In addition to that, Visa is 3.98 times more volatile than Duke Energy Corp. It trades about -0.14 of its total potential returns per unit of risk. Duke Energy Corp is currently generating about -0.1 per unit of volatility. If you would invest 2,440 in Duke Energy Corp on January 6, 2025 and sell it today you would lose (45.00) from holding Duke Energy Corp or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Duke Energy Corp
Performance |
| Timeline |
| Visa Class A |
| Duke Energy Corp |
Visa and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Duke Energy
The main advantage of trading using opposite Visa and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Duke Energy vs. Southern Co | Duke Energy vs. DTE Energy Co | Duke Energy vs. CMS Energy Corp | Duke Energy vs. CMS Energy Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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