Correlation Between DTE Energy and Genie Energy

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

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

Diversification Opportunities for DTE Energy and Genie Energy

0.03

Correlation Coefficient

DTE Energy  Genie Energy

Significant diversification

The 3 months correlation between DTE and Genie is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Genie Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Energy 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 Genie Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Energy has no effect on the direction of DTE Energy i.e., DTE Energy and Genie Energy go up and down completely randomly.

Pair Corralation between DTE Energy and Genie Energy

Considering the 90-day investment horizon DTE Energy is expected to generate 0.56 times more return on investment than Genie Energy. However, DTE Energy is 1.8 times less risky than Genie Energy. It trades about 0.02 of its potential returns per unit of risk. Genie Energy is currently generating about -0.05 per unit of risk. If you would invest  12,452  in DTE Energy on September 2, 2024 and sell it today you would earn a total of  126.00  from holding DTE Energy or generate 1.01% return on investment over 90 days.

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

DTE Energy  vs.  Genie Energy

DTE Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DTE Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, DTE Energy is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Genie Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genie Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Genie Energy is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DTE Energy and Genie Energy

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

The idea behind DTE Energy and Genie Energy 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.