Correlation Between Energisa Mato and Duke Energy

Can any of the company-specific risk be diversified away by investing in both Energisa Mato 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 Energisa Mato and Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energisa Mato Grosso and Duke Energy, you can compare the effects of market volatilities on Energisa Mato 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 Energisa Mato with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa Mato and Duke Energy.

Diversification Opportunities for Energisa Mato and Duke Energy

0.74

Correlation Coefficient

Energisa Mato  Duke Energy

Poor diversification

The 3 months correlation between Energisa and Duke is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Energisa Mato Grosso and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and Energisa Mato 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 Energisa Mato Grosso 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 Energisa Mato i.e., Energisa Mato and Duke Energy go up and down completely randomly.

Pair Corralation between Energisa Mato and Duke Energy

Assuming the 90 days trading horizon Energisa Mato Grosso is expected to generate 2.24 times more return on investment than Duke Energy. However, Energisa Mato is 2.24 times more volatile than Duke Energy. It trades about 0.22 of its potential returns per unit of risk. Duke Energy is currently generating about 0.35 per unit of risk. If you would invest  7,500  in Energisa Mato Grosso on February 4, 2024 and sell it today you would earn a total of  499.00  from holding Energisa Mato Grosso or generate 6.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Energisa Mato Grosso  vs.  Duke Energy

Energisa Mato Grosso

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa Mato Grosso are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Energisa Mato unveiled solid returns over the last few months and may actually be approaching a breakup point.

Duke Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duke Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Duke Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Energisa Mato and Duke Energy

The main advantage of trading using opposite Energisa Mato and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa Mato 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 Energisa Mato Grosso 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.

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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.