Correlation Between DTE Energy and VivoPower International

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

Diversification Opportunities for DTE Energy and VivoPower International

-0.55

Correlation Coefficient

DTE Energy  VivoPower International

Excellent diversification

The 3 months correlation between DTE and VivoPower is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International 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 VivoPower International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VivoPower International has no effect on the direction of DTE Energy i.e., DTE Energy and VivoPower International go up and down completely randomly.

Pair Corralation between DTE Energy and VivoPower International

Considering the 90-day investment horizon DTE Energy Co is expected to under-perform the VivoPower International. But the stock apears to be less risky and, when comparing its historical volatility, DTE Energy Co is 11.84 times less risky than VivoPower International. The stock trades about -0.35 of its potential returns per unit of risk. The VivoPower International PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  112.00  in VivoPower International PLC on September 27, 2024 and sell it today you would earn a total of  31.00  from holding VivoPower International PLC or generate 27.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

DTE Energy Co  vs.  VivoPower International PLC

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.

VivoPower International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DTE Energy and VivoPower International

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

The idea behind DTE Energy Co and VivoPower International PLC 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.