Correlation Between Duke Energy and Pure Cycle
Can any of the company-specific risk be diversified away by investing in both Duke Energy and Pure Cycle 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 Pure Cycle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and Pure Cycle, you can compare the effects of market volatilities on Duke Energy and Pure Cycle 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 Pure Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and Pure Cycle.
Diversification Opportunities for Duke Energy and Pure Cycle
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Duke and Pure is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and Pure Cycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Cycle 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 Pure Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Cycle has no effect on the direction of Duke Energy i.e., Duke Energy and Pure Cycle go up and down completely randomly.
Pair Corralation between Duke Energy and Pure Cycle
Considering the 90-day investment horizon Duke Energy is expected to generate 0.56 times more return on investment than Pure Cycle. However, Duke Energy is 1.77 times less risky than Pure Cycle. It trades about 0.06 of its potential returns per unit of risk. Pure Cycle is currently generating about 0.0 per unit of risk. If you would invest 8,366 in Duke Energy on March 24, 2025 and sell it today you would earn a total of 3,174 from holding Duke Energy or generate 37.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duke Energy vs. Pure Cycle
Performance |
| Timeline |
| Duke Energy |
| Pure Cycle |
Duke Energy and Pure Cycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and Pure Cycle
The main advantage of trading using opposite Duke Energy and Pure Cycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, Pure Cycle 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 Pure Cycle will offset losses from the drop in Pure Cycle's long position.| Duke Energy vs. Consolidated Edison | Duke Energy vs. Dominion Energy | Duke Energy vs. American Electric Power | Duke Energy vs. Nextera Energy |
| Pure Cycle vs. Cadiz Inc | Pure Cycle vs. Artesian Resources | Pure Cycle vs. Global Water Resources | Pure Cycle vs. Parke Bancorp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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