Correlation Between Entergy Louisiana and DTE Energy
Can any of the company-specific risk be diversified away by investing in both Entergy Louisiana 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 Entergy Louisiana and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entergy Louisiana LLC and DTE Energy Co, you can compare the effects of market volatilities on Entergy Louisiana 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 Entergy Louisiana with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy Louisiana and DTE Energy.
Diversification Opportunities for Entergy Louisiana and DTE Energy
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Entergy and DTE is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Entergy Louisiana LLC and DTE Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Entergy Louisiana 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 Entergy Louisiana LLC 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 Entergy Louisiana i.e., Entergy Louisiana and DTE Energy go up and down completely randomly.
Pair Corralation between Entergy Louisiana and DTE Energy
Considering the 90-day investment horizon Entergy Louisiana LLC is expected to generate 0.95 times more return on investment than DTE Energy. However, Entergy Louisiana LLC is 1.05 times less risky than DTE Energy. It trades about 0.02 of its potential returns per unit of risk. DTE Energy Co is currently generating about 0.02 per unit of risk. If you would invest 2,079 in Entergy Louisiana LLC on August 31, 2024 and sell it today you would earn a total of 121.00 from holding Entergy Louisiana LLC or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Entergy Louisiana LLC vs. DTE Energy Co
Performance |
| Timeline |
| Entergy Louisiana LLC |
| DTE Energy |
Entergy Louisiana and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy Louisiana and DTE Energy
The main advantage of trading using opposite Entergy Louisiana and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy Louisiana 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.| Entergy Louisiana vs. The Coca Cola | Entergy Louisiana vs. Celsius Holdings | Entergy Louisiana vs. SNDL Inc | Entergy Louisiana vs. Brandywine Realty Trust |
| DTE Energy vs. Southern Co | DTE Energy vs. Duke Energy Corp | DTE Energy vs. Georgia Power Co | DTE Energy vs. Entergy Arkansas LLC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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