Correlation Between CenterPoint Energy and Codexis
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and Codexis 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 Codexis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and Codexis, you can compare the effects of market volatilities on CenterPoint Energy and Codexis 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 Codexis. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and Codexis.
Diversification Opportunities for CenterPoint Energy and Codexis
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CenterPoint and Codexis is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis 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 Codexis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codexis has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and Codexis go up and down completely randomly.
Pair Corralation between CenterPoint Energy and Codexis
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 3.2 times less return on investment than Codexis. But when comparing it to its historical volatility, CenterPoint Energy is 2.89 times less risky than Codexis. It trades about 0.35 of its potential returns per unit of risk. Codexis is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 321.00 in Codexis on August 31, 2024 and sell it today you would earn a total of 137.00 from holding Codexis or generate 42.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CenterPoint Energy vs. Codexis
Performance |
| Timeline |
| CenterPoint Energy |
| Codexis |
CenterPoint Energy and Codexis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and Codexis
The main advantage of trading using opposite CenterPoint Energy and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, Codexis 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 Codexis will offset losses from the drop in Codexis' long position.| CenterPoint Energy vs. DTE Energy | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Pinnacle West Capital |
| Codexis vs. Nuvation Bio | Codexis vs. Lyell Immunopharma | Codexis vs. Century Therapeutics | Codexis vs. Generation Bio Co |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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