Correlation Between Transmissora Aliana and Duke Energy

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

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

Diversification Opportunities for Transmissora Aliana and Duke Energy

0.07

Correlation Coefficient

Transmissora Aliana  Duke Energy

Significant diversification

The 3 months correlation between Transmissora and Duke is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Transmissora Aliana de and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and Transmissora Aliana 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 Transmissora Aliana de 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 Transmissora Aliana i.e., Transmissora Aliana and Duke Energy go up and down completely randomly.

Pair Corralation between Transmissora Aliana and Duke Energy

Assuming the 90 days trading horizon Transmissora Aliana is expected to generate 7.84 times less return on investment than Duke Energy. In addition to that, Transmissora Aliana is 1.01 times more volatile than Duke Energy. It trades about 0.05 of its total potential returns per unit of risk. Duke Energy is currently generating about 0.38 per unit of volatility. If you would invest  45,450  in Duke Energy on February 3, 2024 and sell it today you would earn a total of  5,100  from holding Duke Energy or generate 11.22% return on investment over 90 days.

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

Transmissora Aliana de  vs.  Duke Energy

Transmissora Aliana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transmissora Aliana de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Transmissora Aliana is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 Transmissora Aliana and Duke Energy

The main advantage of trading using opposite Transmissora Aliana and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transmissora Aliana 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 Transmissora Aliana de 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.