Correlation Between DTE Energy and Enel Americas

Can any of the company-specific risk be diversified away by investing in both DTE Energy and Enel Americas 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 Enel Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DTE Energy and Enel Americas SA, you can compare the effects of market volatilities on DTE Energy and Enel Americas 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 Enel Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Enel Americas.

Diversification Opportunities for DTE Energy and Enel Americas

0.0

Correlation Coefficient

DTE Energy  Enel Americas

Pay attention - limited upside

The 3 months correlation between DTE and Enel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Enel Americas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Americas SA 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 Enel Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Americas SA has no effect on the direction of DTE Energy i.e., DTE Energy and Enel Americas go up and down completely randomly.

Pair Corralation between DTE Energy and Enel Americas

If you would invest  10,520  in DTE Energy on January 25, 2024 and sell it today you would earn a total of  635.00  from holding DTE Energy or generate 6.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

DTE Energy  vs.  Enel Americas SA

DTE Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DTE Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, DTE Energy may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Enel Americas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enel Americas SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Enel Americas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DTE Energy and Enel Americas

The main advantage of trading using opposite DTE Energy and Enel Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Enel Americas 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 Enel Americas will offset losses from the drop in Enel Americas' long position.

The idea behind DTE Energy and Enel Americas SA 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..