Correlation Between Spring Valley and DTE Energy

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

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

Diversification Opportunities for Spring Valley and DTE Energy

0.57

Correlation Coefficient

Spring Valley  DTE Energy

Very weak diversification

The 3 months correlation between Spring and DTE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and DTE Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Spring Valley 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 Spring Valley Acquisition 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 Spring Valley i.e., Spring Valley and DTE Energy go up and down completely randomly.

Pair Corralation between Spring Valley and DTE Energy

Assuming the 90 days horizon Spring Valley Acquisition is expected to generate 22.86 times more return on investment than DTE Energy. However, Spring Valley is 22.86 times more volatile than DTE Energy Co. It trades about 0.17 of its potential returns per unit of risk. DTE Energy Co is currently generating about 0.12 per unit of risk. If you would invest  8.95  in Spring Valley Acquisition on May 2, 2025 and sell it today you would earn a total of  9.05  from holding Spring Valley Acquisition or generate 101.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.13%
Values	Daily Returns

Spring Valley Acquisition  vs.  DTE Energy Co

Spring Valley Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spring Valley Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Spring Valley reported solid returns over the last few months and may actually be approaching a breakup point.

DTE Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DTE Energy Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, DTE Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Spring Valley and DTE Energy

The main advantage of trading using opposite Spring Valley and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley 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 Spring Valley Acquisition 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.