Correlation Between DTE Energy and Strats SM
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Strats SM 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 Strats SM 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 Strats SM Trust, you can compare the effects of market volatilities on DTE Energy and Strats SM 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 Strats SM. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Strats SM.
Diversification Opportunities for DTE Energy and Strats SM
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between DTE and Strats is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and Strats SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats SM Trust 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 Strats SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats SM Trust has no effect on the direction of DTE Energy i.e., DTE Energy and Strats SM go up and down completely randomly.
Pair Corralation between DTE Energy and Strats SM
Considering the 90-day investment horizon DTE Energy Co is expected to under-perform the Strats SM. In addition to that, DTE Energy is 1.61 times more volatile than Strats SM Trust. It trades about -0.27 of its total potential returns per unit of risk. Strats SM Trust is currently generating about 0.01 per unit of volatility. If you would invest 2,499 in Strats SM Trust on September 15, 2024 and sell it today you would earn a total of 1.00 from holding Strats SM Trust or generate 0.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy Co vs. Strats SM Trust
Performance |
| Timeline |
| DTE Energy |
| Strats SM Trust |
DTE Energy and Strats SM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Strats SM
The main advantage of trading using opposite DTE Energy and Strats SM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Strats SM 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 Strats SM will offset losses from the drop in Strats SM'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 |
| Strats SM vs. B Riley Financial | Strats SM vs. DTE Energy Co | Strats SM vs. Aquagold International | Strats SM 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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