Correlation Between DTE Energy and Stifel Financial
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Stifel Financial 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 Stifel Financial 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 Stifel Financial, you can compare the effects of market volatilities on DTE Energy and Stifel Financial 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 Stifel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Stifel Financial.
Diversification Opportunities for DTE Energy and Stifel Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DTE and Stifel is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of DTE Energy i.e., DTE Energy and Stifel Financial go up and down completely randomly.
Pair Corralation between DTE Energy and Stifel Financial
Considering the 90-day investment horizon DTE Energy Co is expected to under-perform the Stifel Financial. In addition to that, DTE Energy is 1.08 times more volatile than Stifel Financial. It trades about -0.13 of its total potential returns per unit of risk. Stifel Financial is currently generating about -0.1 per unit of volatility. If you would invest 2,248 in Stifel Financial on August 27, 2024 and sell it today you would lose (38.00) from holding Stifel Financial or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy Co vs. Stifel Financial
Performance |
| Timeline |
| DTE Energy |
| Stifel Financial |
DTE Energy and Stifel Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Stifel Financial
The main advantage of trading using opposite DTE Energy and Stifel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Stifel Financial 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 Stifel Financial will offset losses from the drop in Stifel Financial'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 |
| Stifel Financial vs. Reinsurance Group of | Stifel Financial vs. Southern Co | Stifel Financial vs. DTE Energy Co | Stifel Financial vs. Georgia Power Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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