Correlation Between Duke Energy and SunPower
Can any of the company-specific risk be diversified away by investing in both Duke Energy and SunPower 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 SunPower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and SunPower, you can compare the effects of market volatilities on Duke Energy and SunPower 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 SunPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and SunPower.
Diversification Opportunities for Duke Energy and SunPower
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Duke and SunPower is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and SunPower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunPower 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 SunPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunPower has no effect on the direction of Duke Energy i.e., Duke Energy and SunPower go up and down completely randomly.
Pair Corralation between Duke Energy and SunPower
Considering the 90-day investment horizon Duke Energy is expected to generate 0.21 times more return on investment than SunPower. However, Duke Energy is 4.86 times less risky than SunPower. It trades about 0.2 of its potential returns per unit of risk. SunPower is currently generating about -0.22 per unit of risk. If you would invest 9,065 in Duke Energy on January 25, 2024 and sell it today you would earn a total of 755.00 from holding Duke Energy or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duke Energy vs. SunPower
Performance |
| Timeline |
| Duke Energy |
| SunPower |
Duke Energy and SunPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and SunPower
The main advantage of trading using opposite Duke Energy and SunPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy position performs unexpectedly, SunPower 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 SunPower will offset losses from the drop in SunPower's long position.| Duke Energy vs. Consolidated Edison | Duke Energy vs. Dominion Energy | Duke Energy vs. American Electric Power | Duke Energy vs. Nextera Energy |
| SunPower vs. Sunnova Energy International | SunPower vs. Nextracker Class A | SunPower vs. Sunrun Inc | SunPower vs. Maxeon Solar Technologies |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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