Correlation Between Consolidated Edison and DTE Energy
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and DTE 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 Consolidated Edison and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and DTE Energy, you can compare the effects of market volatilities on Consolidated Edison and DTE 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 Consolidated Edison with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and DTE Energy.
Diversification Opportunities for Consolidated Edison and DTE Energy
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Consolidated and DTE is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and DTE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Consolidated Edison 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 Consolidated Edison are associated (or correlated) with DTE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTE Energy has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and DTE Energy go up and down completely randomly.
Pair Corralation between Consolidated Edison and DTE Energy
Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 0.94 times more return on investment than DTE Energy. However, Consolidated Edison is 1.06 times less risky than DTE Energy. It trades about 0.02 of its potential returns per unit of risk. DTE Energy is currently generating about -0.01 per unit of risk. If you would invest 8,765 in Consolidated Edison on January 26, 2024 and sell it today you would earn a total of 578.00 from holding Consolidated Edison or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. DTE Energy
Performance |
| Timeline |
| Consolidated Edison |
| DTE Energy |
Consolidated Edison and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and DTE Energy
The main advantage of trading using opposite Consolidated Edison and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, DTE 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 DTE Energy will offset losses from the drop in DTE Energy's long position.| Consolidated Edison vs. Southern Company | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy | Consolidated Edison vs. Duke Energy |
| DTE Energy vs. Southern Company | DTE Energy vs. American Electric Power | DTE Energy vs. Nextera Energy | DTE Energy vs. Duke Energy |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |