Correlation Between Interconnection Electric and Duke Energy
Can any of the company-specific risk be diversified away by investing in both Interconnection Electric 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 Interconnection Electric and Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interconnection Electric SA and Duke Energy, you can compare the effects of market volatilities on Interconnection Electric 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 Interconnection Electric with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interconnection Electric and Duke Energy.
Diversification Opportunities for Interconnection Electric and Duke Energy
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Interconnection and Duke is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Interconnection Electric SA and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and Interconnection Electric 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 Interconnection Electric SA 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 Interconnection Electric i.e., Interconnection Electric and Duke Energy go up and down completely randomly.
Pair Corralation between Interconnection Electric and Duke Energy
Assuming the 90 days horizon Interconnection Electric SA is expected to generate 3.49 times more return on investment than Duke Energy. However, Interconnection Electric is 3.49 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 0.15 per unit of risk. If you would invest 10,250 in Interconnection Electric SA on January 21, 2024 and sell it today you would earn a total of 556.00 from holding Interconnection Electric SA or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Interconnection Electric SA vs. Duke Energy
Performance |
| Timeline |
| Interconnection Electric |
| Duke Energy |
Interconnection Electric and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interconnection Electric and Duke Energy
The main advantage of trading using opposite Interconnection Electric and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interconnection Electric 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.| Interconnection Electric vs. Entergy New Orleans | Interconnection Electric vs. Southern Co | Interconnection Electric vs. Entergy New Orleans |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |