Correlation Between DTE Energy and Xcel Energy
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Xcel 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 Xcel 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 Xcel Energy, you can compare the effects of market volatilities on DTE Energy and Xcel 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 Xcel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Xcel Energy.
Diversification Opportunities for DTE Energy and Xcel Energy
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DTE and Xcel is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel 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 Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of DTE Energy i.e., DTE Energy and Xcel Energy go up and down completely randomly.
Pair Corralation between DTE Energy and Xcel Energy
Considering the 90-day investment horizon DTE Energy is expected to generate 1.26 times more return on investment than Xcel Energy. However, DTE Energy is 1.26 times more volatile than Xcel Energy. It trades about 0.15 of its potential returns per unit of risk. Xcel Energy is currently generating about 0.13 per unit of risk. If you would invest 12,366 in DTE Energy on November 18, 2024 and sell it today you would earn a total of 538.00 from holding DTE Energy or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy vs. Xcel Energy
Performance |
| Timeline |
| DTE Energy |
| Xcel Energy |
DTE Energy and Xcel Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Xcel Energy
The main advantage of trading using opposite DTE Energy and Xcel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Xcel 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 Xcel Energy will offset losses from the drop in Xcel Energy's long position.| DTE Energy vs. Alliant Energy Corp | DTE Energy vs. Ameren Corp | DTE Energy vs. CenterPoint Energy | DTE Energy vs. Pinnacle West Capital |
| Xcel Energy vs. Alliant Energy Corp | Xcel Energy vs. Entergy | Xcel Energy vs. Pinnacle West Capital | Xcel Energy vs. CMS 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |