Correlation Between DTE Energy and Duff Phelps

Can any of the company-specific risk be diversified away by investing in both DTE Energy and Duff Phelps 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 Duff Phelps 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 Duff Phelps Global, you can compare the effects of market volatilities on DTE Energy and Duff Phelps 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 Duff Phelps. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Duff Phelps.

Diversification Opportunities for DTE Energy and Duff Phelps

0.19

Correlation Coefficient

DTE Energy  Duff Phelps

Average diversification

The 3 months correlation between DTE and Duff is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and Duff Phelps Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duff Phelps Global 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 Duff Phelps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duff Phelps Global has no effect on the direction of DTE Energy i.e., DTE Energy and Duff Phelps go up and down completely randomly.

Pair Corralation between DTE Energy and Duff Phelps

Considering the 90-day investment horizon DTE Energy is expected to generate 1.81 times less return on investment than Duff Phelps. But when comparing it to its historical volatility, DTE Energy Co is 1.34 times less risky than Duff Phelps. It trades about 0.01 of its potential returns per unit of risk. Duff Phelps Global is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,261  in Duff Phelps Global on October 12, 2024 and sell it today you would earn a total of  10.00  from holding Duff Phelps Global or generate 0.79% 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.  Duff Phelps Global

DTE Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DTE Energy Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Duff Phelps Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duff Phelps Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Duff Phelps is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DTE Energy and Duff Phelps

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

The idea behind DTE Energy Co and Duff Phelps Global 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.