Correlation Between Brookfield Renewable and DTE Energy
Can any of the company-specific risk be diversified away by investing in both Brookfield Renewable 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 Brookfield Renewable and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Renewable Partners and DTE Energy, you can compare the effects of market volatilities on Brookfield Renewable 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 Brookfield Renewable with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and DTE Energy.
Diversification Opportunities for Brookfield Renewable and DTE Energy
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookfield and DTE is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Partners and DTE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Brookfield Renewable 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 Brookfield Renewable Partners 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 Brookfield Renewable i.e., Brookfield Renewable and DTE Energy go up and down completely randomly.
Pair Corralation between Brookfield Renewable and DTE Energy
Assuming the 90 days trading horizon Brookfield Renewable Partners is expected to under-perform the DTE Energy. In addition to that, Brookfield Renewable is 2.47 times more volatile than DTE Energy. It trades about -0.17 of its total potential returns per unit of risk. DTE Energy is currently generating about -0.31 per unit of volatility. If you would invest 2,053 in DTE Energy on August 24, 2024 and sell it today you would lose (106.00) from holding DTE Energy or give up 5.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Renewable Partners vs. DTE Energy
Performance |
| Timeline |
| Brookfield Renewable |
| DTE Energy |
Brookfield Renewable and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Renewable and DTE Energy
The main advantage of trading using opposite Brookfield Renewable and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Renewable 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.| Brookfield Renewable vs. Brookfield Infrastructure Partners | Brookfield Renewable vs. Brookfield Infrastructure Partners | Brookfield Renewable vs. Entergy Texas | Brookfield Renewable vs. Duke Energy |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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