Correlation Between DTE Energy and Genie Energy
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Genie 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 DTE Energy and Genie Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTE Energy and Genie Energy, you can compare the effects of market volatilities on DTE Energy and Genie 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 DTE Energy with a short position of Genie Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Genie Energy.
Diversification Opportunities for DTE Energy and Genie Energy
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between DTE and Genie is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Genie Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Energy and DTE 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 DTE Energy are associated (or correlated) with Genie Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Energy has no effect on the direction of DTE Energy i.e., DTE Energy and Genie Energy go up and down completely randomly.
Pair Corralation between DTE Energy and Genie Energy
Considering the 90-day investment horizon DTE Energy is expected to generate 0.59 times more return on investment than Genie Energy. However, DTE Energy is 1.71 times less risky than Genie Energy. It trades about 0.12 of its potential returns per unit of risk. Genie Energy is currently generating about -0.02 per unit of risk. If you would invest 10,613 in DTE Energy on March 12, 2024 and sell it today you would earn a total of 620.00 from holding DTE Energy or generate 5.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
DTE Energy vs. Genie Energy
Performance |
Timeline |
DTE Energy |
Genie Energy |
DTE Energy and Genie Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DTE Energy and Genie Energy
The main advantage of trading using opposite DTE Energy and Genie Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Genie 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 Genie Energy will offset losses from the drop in Genie Energy's long position.DTE Energy vs. Southern Company | DTE Energy vs. American Electric Power | DTE Energy vs. Nextera Energy | DTE Energy vs. Consolidated Edison |
Genie Energy vs. Southern Company | Genie Energy vs. American Electric Power | Genie Energy vs. Nextera Energy | Genie Energy vs. Consolidated Edison |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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