Correlation Between DTE Energy and Consumers Energy
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Consumers 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 Consumers 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 Consumers Energy, you can compare the effects of market volatilities on DTE Energy and Consumers 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 Consumers Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Consumers Energy.
Diversification Opportunities for DTE Energy and Consumers Energy
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DTE and Consumers is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Consumers Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumers 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 Consumers Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumers Energy has no effect on the direction of DTE Energy i.e., DTE Energy and Consumers Energy go up and down completely randomly.
Pair Corralation between DTE Energy and Consumers Energy
Considering the 90-day investment horizon DTE Energy is expected to under-perform the Consumers Energy. But the stock apears to be less risky and, when comparing its historical volatility, DTE Energy is 1.71 times less risky than Consumers Energy. The stock trades about -0.05 of its potential returns per unit of risk. The Consumers Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,968 in Consumers Energy on August 28, 2024 and sell it today you would earn a total of 140.00 from holding Consumers Energy or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy vs. Consumers Energy
Performance |
| Timeline |
| DTE Energy |
| Consumers Energy |
DTE Energy and Consumers Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Consumers Energy
The main advantage of trading using opposite DTE Energy and Consumers Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Consumers 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 Consumers Energy will offset losses from the drop in Consumers Energy's long position.| DTE Energy vs. Consumers Energy | DTE Energy vs. CMS Energy | DTE Energy vs. Cadiz Depositary Shares | DTE Energy vs. DTE Energy |
| Consumers Energy vs. Nextera Energy | Consumers Energy vs. Duke Energy | Consumers Energy vs. PGE Corp | Consumers Energy vs. Southern Company |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |