Correlation Between Cadiz Depositary and DTE Energy
Can any of the company-specific risk be diversified away by investing in both Cadiz Depositary 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 Cadiz Depositary and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadiz Depositary Shares and DTE Energy Co, you can compare the effects of market volatilities on Cadiz Depositary 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 Cadiz Depositary with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and DTE Energy.
Diversification Opportunities for Cadiz Depositary and DTE Energy
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cadiz and DTE is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and DTE Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Cadiz Depositary 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 Cadiz Depositary Shares 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 Cadiz Depositary i.e., Cadiz Depositary and DTE Energy go up and down completely randomly.
Pair Corralation between Cadiz Depositary and DTE Energy
Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 1.95 times more return on investment than DTE Energy. However, Cadiz Depositary is 1.95 times more volatile than DTE Energy Co. It trades about 0.09 of its potential returns per unit of risk. DTE Energy Co is currently generating about -0.01 per unit of risk. If you would invest 1,293 in Cadiz Depositary Shares on August 27, 2024 and sell it today you would earn a total of 327.00 from holding Cadiz Depositary Shares or generate 25.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadiz Depositary Shares vs. DTE Energy Co
Performance |
| Timeline |
| Cadiz Depositary Shares |
| DTE Energy |
Cadiz Depositary and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadiz Depositary and DTE Energy
The main advantage of trading using opposite Cadiz Depositary and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz Depositary 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.| Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. LifeMD Preferred Series | Cadiz Depositary vs. Aquagold International | Cadiz Depositary vs. Morningstar Unconstrained Allocation |
| DTE Energy vs. Southern Co | DTE Energy vs. Duke Energy Corp | DTE Energy vs. Georgia Power Co | DTE Energy vs. Entergy Arkansas LLC |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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