Correlation Between DTE Energy and Avangrid
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Avangrid 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 Avangrid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTE Energy and Avangrid, you can compare the effects of market volatilities on DTE Energy and Avangrid 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 Avangrid. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Avangrid.
Diversification Opportunities for DTE Energy and Avangrid
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between DTE and Avangrid is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Avangrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avangrid 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 Avangrid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avangrid has no effect on the direction of DTE Energy i.e., DTE Energy and Avangrid go up and down completely randomly.
Pair Corralation between DTE Energy and Avangrid
Considering the 90-day investment horizon DTE Energy is expected to generate 0.82 times more return on investment than Avangrid. However, DTE Energy is 1.23 times less risky than Avangrid. It trades about 0.04 of its potential returns per unit of risk. Avangrid is currently generating about 0.01 per unit of risk. If you would invest 10,758 in DTE Energy on August 28, 2024 and sell it today you would earn a total of 1,760 from holding DTE Energy or generate 16.36% 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. Avangrid
Performance |
| Timeline |
| DTE Energy |
| Avangrid |
DTE Energy and Avangrid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Avangrid
The main advantage of trading using opposite DTE Energy and Avangrid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Avangrid 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 Avangrid will offset losses from the drop in Avangrid's long position.| DTE Energy vs. Entergy | DTE Energy vs. Alliant Energy Corp | DTE Energy vs. Pinnacle West Capital | DTE Energy vs. MGE Energy |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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