Correlation Between DTE Energy and Portland General

Can any of the company-specific risk be diversified away by investing in both DTE Energy and Portland General 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 Portland General into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DTE Energy and Portland General Electric, you can compare the effects of market volatilities on DTE Energy and Portland General 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 Portland General. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Portland General.

Diversification Opportunities for DTE Energy and Portland General

0.74

Correlation Coefficient

DTE Energy  Portland General

Poor diversification

The 3 months correlation between DTE and Portland is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Portland General Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portland General Electric 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 are associated (or correlated) with Portland General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portland General Electric has no effect on the direction of DTE Energy i.e., DTE Energy and Portland General go up and down completely randomly.

Pair Corralation between DTE Energy and Portland General

Considering the 90-day investment horizon DTE Energy is expected to generate 0.82 times more return on investment than Portland General. However, DTE Energy is 1.22 times less risky than Portland General. It trades about 0.19 of its potential returns per unit of risk. Portland General Electric is currently generating about 0.03 per unit of risk. If you would invest  11,958  in DTE Energy on December 28, 2024 and sell it today you would earn a total of  1,562  from holding DTE Energy or generate 13.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

DTE Energy  vs.  Portland General Electric

DTE Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DTE Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, DTE Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Portland General Electric

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Portland General Electric are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Portland General is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with DTE Energy and Portland General

The main advantage of trading using opposite DTE Energy and Portland General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Portland General 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 Portland General will offset losses from the drop in Portland General's long position.

The idea behind DTE Energy and Portland General Electric 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..