Correlation Between DTE Energy and Entergy
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Entergy 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 Entergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTE Energy and Entergy, you can compare the effects of market volatilities on DTE Energy and Entergy 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 Entergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Entergy.
Diversification Opportunities for DTE Energy and Entergy
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DTE and Entergy is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy 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 Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of DTE Energy i.e., DTE Energy and Entergy go up and down completely randomly.
Pair Corralation between DTE Energy and Entergy
Considering the 90-day investment horizon DTE Energy is expected to generate 3.25 times less return on investment than Entergy. But when comparing it to its historical volatility, DTE Energy is 1.59 times less risky than Entergy. It trades about 0.08 of its potential returns per unit of risk. Entergy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 10,564 in Entergy on August 24, 2024 and sell it today you would earn a total of 4,591 from holding Entergy or generate 43.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
DTE Energy vs. Entergy
Performance |
| Timeline |
| DTE Energy |
| Entergy |
DTE Energy and Entergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Entergy
The main advantage of trading using opposite DTE Energy and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Entergy 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 Entergy will offset losses from the drop in Entergy's long position.| DTE Energy vs. Alliant Energy Corp | DTE Energy vs. Ameren Corp | DTE Energy vs. CenterPoint Energy | DTE Energy vs. Pinnacle West Capital |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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