Correlation Between DTE Energy and Cadiz Depositary
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Cadiz Depositary 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 Cadiz Depositary into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTE Energy and Cadiz Depositary Shares, you can compare the effects of market volatilities on DTE Energy and Cadiz Depositary 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 Cadiz Depositary. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Cadiz Depositary.
Diversification Opportunities for DTE Energy and Cadiz Depositary
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DTE and Cadiz is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Cadiz Depositary Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadiz Depositary Shares 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 Cadiz Depositary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadiz Depositary Shares has no effect on the direction of DTE Energy i.e., DTE Energy and Cadiz Depositary go up and down completely randomly.
Pair Corralation between DTE Energy and Cadiz Depositary
Considering the 90-day investment horizon DTE Energy is expected to generate 5.74 times less return on investment than Cadiz Depositary. But when comparing it to its historical volatility, DTE Energy is 1.03 times less risky than Cadiz Depositary. It trades about 0.07 of its potential returns per unit of risk. Cadiz Depositary Shares is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,520 in Cadiz Depositary Shares on August 30, 2024 and sell it today you would earn a total of 171.00 from holding Cadiz Depositary Shares or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy vs. Cadiz Depositary Shares
Performance |
| Timeline |
| DTE Energy |
| Cadiz Depositary Shares |
DTE Energy and Cadiz Depositary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Cadiz Depositary
The main advantage of trading using opposite DTE Energy and Cadiz Depositary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Cadiz Depositary 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 Cadiz Depositary will offset losses from the drop in Cadiz Depositary's long position.| DTE Energy vs. Alliant Energy Corp | DTE Energy vs. Exelon | DTE Energy vs. Evergy, | DTE Energy vs. Pinnacle West Capital |
| Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. LifeMD Preferred Series | Cadiz Depositary vs. Aquagold International | Cadiz Depositary vs. Morningstar Unconstrained Allocation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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