Correlation Between Pacific Gas and DTE Energy
Can any of the company-specific risk be diversified away by investing in both Pacific Gas 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 Pacific Gas and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Gas and and DTE Energy, you can compare the effects of market volatilities on Pacific Gas 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 Pacific Gas with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Gas and DTE Energy.
Diversification Opportunities for Pacific Gas and DTE Energy
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pacific and DTE is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Gas and and DTE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Pacific Gas 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 Pacific Gas and 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 Pacific Gas i.e., Pacific Gas and DTE Energy go up and down completely randomly.
Pair Corralation between Pacific Gas and DTE Energy
Assuming the 90 days trading horizon Pacific Gas and is expected to generate 3.68 times more return on investment than DTE Energy. However, Pacific Gas is 3.68 times more volatile than DTE Energy. It trades about 0.06 of its potential returns per unit of risk. DTE Energy is currently generating about -0.35 per unit of risk. If you would invest 1,805 in Pacific Gas and on August 24, 2024 and sell it today you would earn a total of 20.00 from holding Pacific Gas and or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 34.78% |
| Values | Daily Returns |
Pacific Gas and vs. DTE Energy
Performance |
| Timeline |
| Pacific Gas |
| DTE Energy |
Pacific Gas and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Gas and DTE Energy
The main advantage of trading using opposite Pacific Gas and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Gas 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.| Pacific Gas vs. Duke Energy Corp | Pacific Gas vs. Southern Co | Pacific Gas vs. National Rural Utilities | Pacific Gas vs. CMS Energy Corp |
| DTE Energy vs. Southern Company Series | DTE Energy vs. Southern Co | DTE Energy vs. DTE Energy Co | DTE Energy vs. Affiliated Managers Group, |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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