Correlation Between DTE Energy and Entergy New
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Entergy New 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 New 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 New Orleans, you can compare the effects of market volatilities on DTE Energy and Entergy New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Entergy New.
Diversification Opportunities for DTE Energy and Entergy New
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DTE and Entergy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy Co and Entergy New Orleans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy New Orleans 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy New Orleans has no effect on the direction of DTE Energy i.e., DTE Energy and Entergy New go up and down completely randomly.
Pair Corralation between DTE Energy and Entergy New
Considering the 90-day investment horizon DTE Energy Co is expected to generate 0.9 times more return on investment than Entergy New. However, DTE Energy Co is 1.11 times less risky than Entergy New. It trades about -0.1 of its potential returns per unit of risk. Entergy New Orleans is currently generating about -0.25 per unit of risk. If you would invest 2,374 in DTE Energy Co on August 28, 2024 and sell it today you would lose (44.00) from holding DTE Energy Co or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy Co vs. Entergy New Orleans
Performance |
| Timeline |
| DTE Energy |
| Entergy New Orleans |
DTE Energy and Entergy New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Entergy New
The main advantage of trading using opposite DTE Energy and Entergy New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Entergy New 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 New will offset losses from the drop in Entergy New's long position.| DTE Energy vs. CMS Energy Corp | DTE Energy vs. American Financial Group | DTE Energy vs. Argo Group 65 | DTE Energy vs. Aegon Funding |
| Entergy New vs. Entergy Arkansas LLC | Entergy New vs. Entergy New Orleans | Entergy New vs. Entergy Mississippi LLC | Entergy New 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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