Correlation Between CenterPoint Energy and Icon Energy

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

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

Diversification Opportunities for CenterPoint Energy and Icon Energy

0.59

Correlation Coefficient

CenterPoint Energy  Icon Energy

Very weak diversification

The 3 months correlation between CenterPoint and Icon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and Icon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Energy Corp and CenterPoint 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 CenterPoint Energy are associated (or correlated) with Icon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Energy Corp has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and Icon Energy go up and down completely randomly.

Pair Corralation between CenterPoint Energy and Icon Energy

Considering the 90-day investment horizon CenterPoint Energy is expected to generate 0.24 times more return on investment than Icon Energy. However, CenterPoint Energy is 4.22 times less risky than Icon Energy. It trades about 0.17 of its potential returns per unit of risk. Icon Energy Corp is currently generating about 0.03 per unit of risk. If you would invest  2,802  in CenterPoint Energy on September 16, 2024 and sell it today you would earn a total of  392.00  from holding CenterPoint Energy or generate 13.99% return on investment over 90 days.

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

CenterPoint Energy  vs.  Icon Energy Corp

CenterPoint Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CenterPoint Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, CenterPoint Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Icon Energy Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Energy Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Icon Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CenterPoint Energy and Icon Energy

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

The idea behind CenterPoint Energy and Icon Energy Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.