Correlation Between DTE Energy and South Jersey
Can any of the company-specific risk be diversified away by investing in both DTE Energy and South Jersey 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 South Jersey 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 South Jersey Industries, you can compare the effects of market volatilities on DTE Energy and South Jersey 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 South Jersey. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and South Jersey.
Diversification Opportunities for DTE Energy and South Jersey
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DTE and South is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and South Jersey Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Jersey Industries 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 South Jersey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Jersey Industries has no effect on the direction of DTE Energy i.e., DTE Energy and South Jersey go up and down completely randomly.
Pair Corralation between DTE Energy and South Jersey
If you would invest 6,745 in South Jersey Industries on September 2, 2024 and sell it today you would earn a total of 0.00 from holding South Jersey Industries or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 1.56% |
| Values | Daily Returns |
DTE Energy Co vs. South Jersey Industries
Performance |
| Timeline |
| DTE Energy |
| South Jersey Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
DTE Energy and South Jersey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and South Jersey
The main advantage of trading using opposite DTE Energy and South Jersey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, South Jersey 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 South Jersey will offset losses from the drop in South Jersey'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 |
| South Jersey vs. Barrick Gold Corp | South Jersey vs. NioCorp Developments Ltd | South Jersey vs. Vindicator Silver Lead Mining | South Jersey vs. Analog Devices |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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