Correlation Between DTE Energy and Affiliated Managers

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

Diversification Opportunities for DTE Energy and Affiliated Managers

0.94

Correlation Coefficient

DTE Energy  Affiliated Managers

Almost no diversification

The 3 months correlation between DTE and Affiliated is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and Affiliated Managers Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers 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 Affiliated Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Managers has no effect on the direction of DTE Energy i.e., DTE Energy and Affiliated Managers go up and down completely randomly.

Pair Corralation between DTE Energy and Affiliated Managers

Considering the 90-day investment horizon DTE Energy is expected to generate 1.8 times less return on investment than Affiliated Managers. But when comparing it to its historical volatility, DTE Energy Co is 2.27 times less risky than Affiliated Managers. It trades about 0.19 of its potential returns per unit of risk. Affiliated Managers Group, is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,021  in Affiliated Managers Group, on July 18, 2024 and sell it today you would earn a total of  60.00  from holding Affiliated Managers Group, or generate 2.97% return on investment over 90 days.

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

DTE Energy Co  vs.  Affiliated Managers Group,

DTE Energy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DTE Energy Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, DTE Energy may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Affiliated Managers

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Affiliated Managers Group, are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Affiliated Managers may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with DTE Energy and Affiliated Managers

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

The idea behind DTE Energy Co and Affiliated Managers Group, 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..