Correlation Between Duke Energy and High Yield

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

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

Diversification Opportunities for Duke Energy and High Yield

-0.01

Correlation Coefficient

Duke Energy  High Yield

Good diversification

The 3 months correlation between Duke and High is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Duke Energy 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 Duke Energy are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Duke Energy i.e., Duke Energy and High Yield go up and down completely randomly.

Pair Corralation between Duke Energy and High Yield

Assuming the 90 days trading horizon Duke Energy is expected to generate 1.93 times less return on investment than High Yield. In addition to that, Duke Energy is 1.6 times more volatile than High Yield Municipal Fund. It trades about 0.04 of its total potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.12 per unit of volatility. If you would invest  864.00  in High Yield Municipal Fund on September 13, 2024 and sell it today you would earn a total of  39.00  from holding High Yield Municipal Fund or generate 4.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.32%
Values	Daily Returns

Duke Energy  vs.  High Yield Municipal Fund

Duke Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duke Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Duke Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

High Yield Municipal

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Municipal Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, High Yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Duke Energy and High Yield

The main advantage of trading using opposite Duke Energy and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.

The idea behind Duke Energy and High Yield Municipal Fund 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.