Correlation Between Consolidated Edison and DTE Energy

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison and DTE 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 Consolidated Edison and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and DTE Energy, you can compare the effects of market volatilities on Consolidated Edison and DTE 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 Consolidated Edison with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and DTE Energy.

Diversification Opportunities for Consolidated Edison and DTE Energy

ConsolidatedDTEDiversified AwayConsolidatedDTEDiversified Away100%
0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Consolidated and DTE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and DTE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Consolidated Edison 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 Consolidated Edison are associated (or correlated) with DTE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTE Energy has no effect on the direction of Consolidated Edison i.e., Consolidated Edison and DTE Energy go up and down completely randomly.

Pair Corralation between Consolidated Edison and DTE Energy

Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 1.28 times less return on investment than DTE Energy. In addition to that, Consolidated Edison is 1.1 times more volatile than DTE Energy. It trades about 0.29 of its total potential returns per unit of risk. DTE Energy is currently generating about 0.41 per unit of volatility. If you would invest  12,173  in DTE Energy on November 27, 2024 and sell it today you would earn a total of  1,166  from holding DTE Energy or generate 9.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Consolidated Edison  vs.  DTE Energy

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505
JavaScript chart by amCharts 3.21.15ED DTE
       Timeline  
Consolidated Edison 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Over the last 90 days Consolidated Edison has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Consolidated Edison is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb889092949698100102
DTE Energy 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in DTE Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, DTE Energy may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb120125130

Consolidated Edison and DTE Energy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.94-2.95-1.96-0.970.01651.02.023.034.05 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15ED DTE
       Returns  

Pair Trading with Consolidated Edison and DTE Energy

The main advantage of trading using opposite Consolidated Edison and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison position performs unexpectedly, DTE 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 DTE Energy will offset losses from the drop in DTE Energy's long position.
The idea behind Consolidated Edison and DTE Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

Other Complementary Tools

Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing