Correlation Between Eagle Point and DTE Energy

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

By analyzing existing cross correlation between Eagle Point Credit and DTE Energy Co, you can compare the effects of market volatilities on Eagle Point 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 Eagle Point with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and DTE Energy.

Diversification Opportunities for Eagle Point and DTE Energy

-0.36

Correlation Coefficient

Eagle Point  DTE Energy

Very good diversification

The 3 months correlation between Eagle and DTE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and DTE Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy and Eagle Point 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 Eagle Point Credit 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 Eagle Point i.e., Eagle Point and DTE Energy go up and down completely randomly.

Pair Corralation between Eagle Point and DTE Energy

Given the investment horizon of 90 days Eagle Point Credit is expected to generate 0.53 times more return on investment than DTE Energy. However, Eagle Point Credit is 1.89 times less risky than DTE Energy. It trades about 0.04 of its potential returns per unit of risk. DTE Energy Co is currently generating about -0.21 per unit of risk. If you would invest  2,434  in Eagle Point Credit on September 18, 2024 and sell it today you would earn a total of  21.00  from holding Eagle Point Credit or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eagle Point Credit  vs.  DTE Energy Co

Eagle Point Credit

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Credit are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DTE Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DTE Energy Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Eagle Point and DTE Energy

The main advantage of trading using opposite Eagle Point and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Point 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 Eagle Point Credit and DTE Energy Co 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.