Correlation Between Equitable Holdings and Duke Energy

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

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

Diversification Opportunities for Equitable Holdings and Duke Energy

0.3

Correlation Coefficient

Equitable Holdings  Duke Energy

Weak diversification

The 3 months correlation between Equitable and Duke is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Equitable Holdings and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and Equitable Holdings 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 Equitable Holdings 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 Equitable Holdings i.e., Equitable Holdings and Duke Energy go up and down completely randomly.

Pair Corralation between Equitable Holdings and Duke Energy

Assuming the 90 days trading horizon Equitable Holdings is expected to generate 2.68 times less return on investment than Duke Energy. In addition to that, Equitable Holdings is 2.44 times more volatile than Duke Energy. It trades about 0.0 of its total potential returns per unit of risk. Duke Energy is currently generating about 0.03 per unit of volatility. If you would invest  2,471  in Duke Energy on September 2, 2024 and sell it today you would earn a total of  15.00  from holding Duke Energy or generate 0.61% return on investment over 90 days.

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

Equitable Holdings  vs.  Duke Energy

Equitable Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equitable Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Equitable Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Duke Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Duke Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Equitable Holdings and Duke Energy

The main advantage of trading using opposite Equitable Holdings and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equitable Holdings 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 Equitable Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.