Correlation Between DTE Energy and Duke Energy
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Duke 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 Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTE Energy Co and Duke Energy Corp, you can compare the effects of market volatilities on DTE Energy and Duke 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 Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Duke Energy.
Diversification Opportunities for DTE Energy and Duke Energy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DTE and Duke is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and Duke Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy Corp 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 Co are associated (or correlated) with Duke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duke Energy Corp has no effect on the direction of DTE Energy i.e., DTE Energy and Duke Energy go up and down completely randomly.
Pair Corralation between DTE Energy and Duke Energy
Considering the 90-day investment horizon DTE Energy is expected to generate 4.31 times less return on investment than Duke Energy. In addition to that, DTE Energy is 1.71 times more volatile than Duke Energy Corp. It trades about 0.03 of its total potential returns per unit of risk. Duke Energy Corp is currently generating about 0.19 per unit of volatility. If you would invest 2,387 in Duke Energy Corp on November 3, 2024 and sell it today you would earn a total of 72.00 from holding Duke Energy Corp or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy Co vs. Duke Energy Corp
Performance |
| Timeline |
| DTE Energy |
| Duke Energy Corp |
DTE Energy and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Duke Energy
The main advantage of trading using opposite DTE Energy and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Duke 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 Duke Energy will offset losses from the drop in Duke Energy's long position.| DTE Energy vs. Southern Co | DTE Energy vs. Duke Energy Corp | DTE Energy vs. Georgia Power Co | DTE Energy vs. Entergy Arkansas LLC |
| Duke Energy vs. Southern Co | Duke Energy vs. DTE Energy Co | Duke Energy vs. CMS Energy Corp | Duke Energy vs. CMS Energy Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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