Correlation Between Via Renewables and DTE Energy

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

By analyzing existing cross correlation between Via Renewables and DTE Energy Co, you can compare the effects of market volatilities on Via Renewables 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 Via Renewables with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and DTE Energy.

Diversification Opportunities for Via Renewables and DTE Energy

-0.83

Correlation Coefficient

Via Renewables  DTE Energy

Pay attention - limited upside

The 3 months correlation between Via and DTE is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and DTE Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Via Renewables 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 Via Renewables 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 Via Renewables i.e., Via Renewables and DTE Energy go up and down completely randomly.

Pair Corralation between Via Renewables and DTE Energy

Assuming the 90 days horizon Via Renewables is expected to generate 1.78 times more return on investment than DTE Energy. However, Via Renewables is 1.78 times more volatile than DTE Energy Co. It trades about 0.09 of its potential returns per unit of risk. DTE Energy Co is currently generating about -0.19 per unit of risk. If you would invest  2,110  in Via Renewables on September 14, 2024 and sell it today you would earn a total of  125.00  from holding Via Renewables or generate 5.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Via Renewables  vs.  DTE Energy Co

Via Renewables

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Via Renewables is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Via Renewables and DTE Energy

The main advantage of trading using opposite Via Renewables and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables 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.

The idea behind Via Renewables and DTE Energy Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.