Correlation Between Portland General and DTE Energy
Can any of the company-specific risk be diversified away by investing in both Portland General 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 Portland General and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Portland General Electric and DTE Energy, you can compare the effects of market volatilities on Portland General 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 Portland General with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Portland General and DTE Energy.
Diversification Opportunities for Portland General and DTE Energy
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Portland and DTE is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Portland General Electric and DTE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Portland General 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 Portland General Electric 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 Portland General i.e., Portland General and DTE Energy go up and down completely randomly.
Pair Corralation between Portland General and DTE Energy
Considering the 90-day investment horizon Portland General Electric is expected to under-perform the DTE Energy. In addition to that, Portland General is 1.22 times more volatile than DTE Energy. It trades about -0.13 of its total potential returns per unit of risk. DTE Energy is currently generating about -0.05 per unit of volatility. If you would invest 12,107 in DTE Energy on November 2, 2024 and sell it today you would lose (174.00) from holding DTE Energy or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Portland General Electric vs. DTE Energy
Performance |
| Timeline |
| Portland General Electric |
| DTE Energy |
Portland General and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Portland General and DTE Energy
The main advantage of trading using opposite Portland General and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Portland General 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.| Portland General vs. MGE Energy | Portland General vs. CMS Energy | Portland General vs. OGE Energy | Portland General vs. DTE Energy |
| DTE Energy vs. Alliant Energy Corp | DTE Energy vs. Ameren Corp | DTE Energy vs. CenterPoint Energy | DTE Energy vs. Pinnacle West Capital |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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