Correlation Between DTE Energy and Crown LNG
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Crown LNG 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 Crown LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTE Energy and Crown LNG Holdings, you can compare the effects of market volatilities on DTE Energy and Crown LNG 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 Crown LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Crown LNG.
Diversification Opportunities for DTE Energy and Crown LNG
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DTE and Crown is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Crown LNG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown LNG Holdings 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 Crown LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown LNG Holdings has no effect on the direction of DTE Energy i.e., DTE Energy and Crown LNG go up and down completely randomly.
Pair Corralation between DTE Energy and Crown LNG
Considering the 90-day investment horizon DTE Energy is expected to under-perform the Crown LNG. But the stock apears to be less risky and, when comparing its historical volatility, DTE Energy is 36.38 times less risky than Crown LNG. The stock trades about -0.31 of its potential returns per unit of risk. The Crown LNG Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2.40 in Crown LNG Holdings on August 24, 2024 and sell it today you would earn a total of 0.61 from holding Crown LNG Holdings or generate 25.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy vs. Crown LNG Holdings
Performance |
| Timeline |
| DTE Energy |
| Crown LNG Holdings |
DTE Energy and Crown LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Crown LNG
The main advantage of trading using opposite DTE Energy and Crown LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Crown LNG 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 Crown LNG will offset losses from the drop in Crown LNG's long position.| DTE Energy vs. Southern Company Series | DTE Energy vs. Southern Co | DTE Energy vs. DTE Energy Co | DTE Energy vs. Affiliated Managers Group, |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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