Correlation Between DTE Energy and Sitka Gold
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Sitka Gold 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 Sitka Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTE Energy Co and Sitka Gold Corp, you can compare the effects of market volatilities on DTE Energy and Sitka Gold 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 Sitka Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Sitka Gold.
Diversification Opportunities for DTE Energy and Sitka Gold
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DTE and Sitka is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and Sitka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitka Gold Corp 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 Co are associated (or correlated) with Sitka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitka Gold Corp has no effect on the direction of DTE Energy i.e., DTE Energy and Sitka Gold go up and down completely randomly.
Pair Corralation between DTE Energy and Sitka Gold
Considering the 90-day investment horizon DTE Energy is expected to generate 15.17 times less return on investment than Sitka Gold. But when comparing it to its historical volatility, DTE Energy Co is 7.93 times less risky than Sitka Gold. It trades about 0.04 of its potential returns per unit of risk. Sitka Gold Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7.81 in Sitka Gold Corp on September 14, 2024 and sell it today you would earn a total of 17.19 from holding Sitka Gold Corp or generate 220.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
DTE Energy Co vs. Sitka Gold Corp
Performance |
Timeline |
DTE Energy |
Sitka Gold Corp |
DTE Energy and Sitka Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DTE Energy and Sitka Gold
The main advantage of trading using opposite DTE Energy and Sitka Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Sitka Gold 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 Sitka Gold will offset losses from the drop in Sitka Gold's long position.DTE Energy vs. Southern Co | DTE Energy vs. Duke Energy Corp | DTE Energy vs. Georgia Power Co | DTE Energy vs. Entergy Arkansas LLC |
Sitka Gold vs. Aurion Resources | Sitka Gold vs. Minera Alamos | Sitka Gold vs. Rio2 Limited | Sitka Gold vs. Roscan Gold Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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