Correlation Between Duke Energy and AES

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

By analyzing existing cross correlation between Duke Energy Corp and The AES, you can compare the effects of market volatilities on Duke Energy and AES 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 AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and AES.

Diversification Opportunities for Duke Energy and AES

-0.39

Correlation Coefficient

Duke Energy  AES

Very good diversification

The 3 months correlation between Duke and AES is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy Corp and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES 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 Corp are associated (or correlated) with AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Duke Energy i.e., Duke Energy and AES go up and down completely randomly.

Pair Corralation between Duke Energy and AES

Given the investment horizon of 90 days Duke Energy Corp is expected to under-perform the AES. But the stock apears to be less risky and, when comparing its historical volatility, Duke Energy Corp is 10.25 times less risky than AES. The stock trades about -0.04 of its potential returns per unit of risk. The The AES is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,018  in The AES on May 2, 2025 and sell it today you would earn a total of  297.00  from holding The AES or generate 29.17% return on investment over 90 days.

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

Duke Energy Corp  vs.  The AES

Duke Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Duke Energy Corp 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 latest stock price disturbance, may contribute to short-term losses for the investors.

AES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, AES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Duke Energy and AES

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

The idea behind Duke Energy Corp and The AES 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.