Correlation Between Sunnova Energy and DTE Energy
Can any of the company-specific risk be diversified away by investing in both Sunnova Energy 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 Sunnova Energy and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunnova Energy International and DTE Energy Co, you can compare the effects of market volatilities on Sunnova Energy 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 Sunnova Energy with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunnova Energy and DTE Energy.
Diversification Opportunities for Sunnova Energy and DTE Energy
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sunnova and DTE is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sunnova Energy International and DTE Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Sunnova 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 Sunnova Energy International 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 Sunnova Energy i.e., Sunnova Energy and DTE Energy go up and down completely randomly.
Pair Corralation between Sunnova Energy and DTE Energy
Given the investment horizon of 90 days Sunnova Energy International is expected to under-perform the DTE Energy. In addition to that, Sunnova Energy is 4.87 times more volatile than DTE Energy Co. It trades about -0.3 of its total potential returns per unit of risk. DTE Energy Co is currently generating about 0.03 per unit of volatility. If you would invest 2,241 in DTE Energy Co on November 3, 2024 and sell it today you would earn a total of 12.00 from holding DTE Energy Co or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunnova Energy International vs. DTE Energy Co
Performance |
| Timeline |
| Sunnova Energy Inter |
| DTE Energy |
Sunnova Energy and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunnova Energy and DTE Energy
The main advantage of trading using opposite Sunnova Energy and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunnova Energy 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.| Sunnova Energy vs. Enphase Energy | Sunnova Energy vs. First Solar | Sunnova Energy vs. SolarEdge Technologies | Sunnova Energy vs. JinkoSolar Holding |
| DTE Energy vs. Southern Co | DTE Energy vs. Duke Energy Corp | DTE Energy vs. Georgia Power Co | DTE Energy vs. Entergy Arkansas LLC |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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