Correlation Between Evergy Common and Duke Energy

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

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

Diversification Opportunities for Evergy Common and Duke Energy

0.88

Correlation Coefficient

Evergy Common  Duke Energy

Very poor diversification

The 3 months correlation between Evergy and Duke is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Evergy Common Stock and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and Evergy Common 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 Evergy Common Stock 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 Evergy Common i.e., Evergy Common and Duke Energy go up and down completely randomly.

Pair Corralation between Evergy Common and Duke Energy

Given the investment horizon of 90 days Evergy Common Stock is expected to generate 1.18 times more return on investment than Duke Energy. However, Evergy Common is 1.18 times more volatile than Duke Energy. It trades about 0.17 of its potential returns per unit of risk. Duke Energy is currently generating about 0.16 per unit of risk. If you would invest  5,005  in Evergy Common Stock on February 5, 2024 and sell it today you would earn a total of  405.00  from holding Evergy Common Stock or generate 8.09% return on investment over 90 days.

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

Evergy Common Stock  vs.  Duke Energy

Evergy Common Stock

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evergy Common Stock are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Evergy Common may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Duke Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duke Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Duke Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Evergy Common and Duke Energy

The main advantage of trading using opposite Evergy Common and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergy Common 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 Evergy Common Stock 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.