Correlation Between EON SE and DTE Energy
Can any of the company-specific risk be diversified away by investing in both EON SE 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 EON SE and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EON SE ADR and DTE Energy, you can compare the effects of market volatilities on EON SE 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 EON SE with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EON SE and DTE Energy.
Diversification Opportunities for EON SE and DTE Energy
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EON and DTE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding EON SE ADR and DTE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and EON SE 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 EON SE ADR 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 EON SE i.e., EON SE and DTE Energy go up and down completely randomly.
Pair Corralation between EON SE and DTE Energy
Assuming the 90 days horizon EON SE is expected to generate 8.3 times less return on investment than DTE Energy. But when comparing it to its historical volatility, EON SE ADR is 1.73 times less risky than DTE Energy. It trades about 0.0 of its potential returns per unit of risk. DTE Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,871 in DTE Energy on August 27, 2024 and sell it today you would earn a total of 89.00 from holding DTE Energy or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.88% |
| Values | Daily Returns |
EON SE ADR vs. DTE Energy
Performance |
| Timeline |
| EON SE ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| DTE Energy |
EON SE and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EON SE and DTE Energy
The main advantage of trading using opposite EON SE and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EON SE 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 EON SE ADR and DTE Energy 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.| DTE Energy vs. Consumers Energy | DTE Energy vs. CMS Energy | DTE Energy vs. Cadiz Depositary Shares | DTE Energy vs. DTE Energy |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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