Correlation Between Verde Clean and Duke Energy

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

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

Diversification Opportunities for Verde Clean and Duke Energy

0.38

Correlation Coefficient

Verde Clean  Duke Energy

Weak diversification

The 3 months correlation between Verde and Duke is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Verde Clean Fuels and Duke Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy Corp and Verde Clean 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 Verde Clean Fuels 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 Corp has no effect on the direction of Verde Clean i.e., Verde Clean and Duke Energy go up and down completely randomly.

Pair Corralation between Verde Clean and Duke Energy

Given the investment horizon of 90 days Verde Clean Fuels is expected to generate 6.84 times more return on investment than Duke Energy. However, Verde Clean is 6.84 times more volatile than Duke Energy Corp. It trades about 0.02 of its potential returns per unit of risk. Duke Energy Corp is currently generating about -0.09 per unit of risk. If you would invest  418.00  in Verde Clean Fuels on September 27, 2024 and sell it today you would earn a total of  8.00  from holding Verde Clean Fuels or generate 1.91% return on investment over 90 days.

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

Verde Clean Fuels  vs.  Duke Energy Corp

Verde Clean Fuels

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Verde Clean Fuels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Verde Clean is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Duke Energy Corp

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Verde Clean and Duke Energy

The main advantage of trading using opposite Verde Clean and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verde Clean 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 Verde Clean Fuels and Duke Energy Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.