Correlation Between 694308KD8 and CenterPoint Energy

Can any of the company-specific risk be diversified away by investing in both 694308KD8 and CenterPoint 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 694308KD8 and CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PCG 525 01 MAR 52 and CenterPoint Energy, you can compare the effects of market volatilities on 694308KD8 and CenterPoint 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 694308KD8 with a short position of CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of 694308KD8 and CenterPoint Energy.

Diversification Opportunities for 694308KD8 and CenterPoint Energy

-0.31

Correlation Coefficient

694308KD8  CenterPoint Energy

Very good diversification

The 3 months correlation between 694308KD8 and CenterPoint is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PCG 525 01 MAR 52 and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy and 694308KD8 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 PCG 525 01 MAR 52 are associated (or correlated) with CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of 694308KD8 i.e., 694308KD8 and CenterPoint Energy go up and down completely randomly.

Pair Corralation between 694308KD8 and CenterPoint Energy

Assuming the 90 days trading horizon PCG 525 01 MAR 52 is expected to under-perform the CenterPoint Energy. In addition to that, 694308KD8 is 1.1 times more volatile than CenterPoint Energy. It trades about -0.06 of its total potential returns per unit of risk. CenterPoint Energy is currently generating about 0.16 per unit of volatility. If you would invest  2,874  in CenterPoint Energy on September 23, 2024 and sell it today you would earn a total of  380.00  from holding CenterPoint Energy or generate 13.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.69%
Values	Daily Returns

PCG 525 01 MAR 52  vs.  CenterPoint Energy

PCG 525 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCG 525 01 MAR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 694308KD8 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CenterPoint Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CenterPoint Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, CenterPoint Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 694308KD8 and CenterPoint Energy

The main advantage of trading using opposite 694308KD8 and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 694308KD8 position performs unexpectedly, CenterPoint 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy's long position.

The idea behind PCG 525 01 MAR 52 and CenterPoint 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.