Correlation Between DTE Energy and Entergy Arkansas
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Entergy Arkansas 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 Arkansas 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 Entergy Arkansas LLC, you can compare the effects of market volatilities on DTE Energy and Entergy Arkansas 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 Arkansas. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Entergy Arkansas.
Diversification Opportunities for DTE Energy and Entergy Arkansas
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DTE and Entergy is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and Entergy Arkansas LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy Arkansas LLC 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 Entergy Arkansas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy Arkansas LLC has no effect on the direction of DTE Energy i.e., DTE Energy and Entergy Arkansas go up and down completely randomly.
Pair Corralation between DTE Energy and Entergy Arkansas
Considering the 90-day investment horizon DTE Energy Co is expected to under-perform the Entergy Arkansas. But the stock apears to be less risky and, when comparing its historical volatility, DTE Energy Co is 1.01 times less risky than Entergy Arkansas. The stock trades about -0.05 of its potential returns per unit of risk. The Entergy Arkansas LLC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,245 in Entergy Arkansas LLC on August 31, 2024 and sell it today you would lose (12.00) from holding Entergy Arkansas LLC or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy Co vs. Entergy Arkansas LLC
Performance |
| Timeline |
| DTE Energy |
| Entergy Arkansas LLC |
DTE Energy and Entergy Arkansas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Entergy Arkansas
The main advantage of trading using opposite DTE Energy and Entergy Arkansas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Entergy Arkansas 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 Arkansas will offset losses from the drop in Entergy Arkansas' long position.| DTE Energy vs. Southern Co | DTE Energy vs. Duke Energy Corp | DTE Energy vs. Georgia Power Co | DTE Energy vs. Entergy Arkansas LLC |
| Entergy Arkansas vs. Entergy Mississippi LLC | Entergy Arkansas vs. Entergy New Orleans | Entergy Arkansas vs. Entergy Louisiana LLC | Entergy Arkansas vs. Southern Co |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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