Correlation Between CenterPoint Energy and CF Industries
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and CF Industries 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 CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and CF Industries Holdings, you can compare the effects of market volatilities on CenterPoint Energy and CF Industries 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 CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and CF Industries.
Diversification Opportunities for CenterPoint Energy and CF Industries
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CenterPoint and CF Industries is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings 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 CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and CF Industries go up and down completely randomly.
Pair Corralation between CenterPoint Energy and CF Industries
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 0.68 times more return on investment than CF Industries. However, CenterPoint Energy is 1.48 times less risky than CF Industries. It trades about 0.03 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.0 per unit of risk. If you would invest 2,880 in CenterPoint Energy on August 30, 2024 and sell it today you would earn a total of 386.00 from holding CenterPoint Energy or generate 13.4% 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. CF Industries Holdings
Performance |
| Timeline |
| CenterPoint Energy |
| CF Industries Holdings |
CenterPoint Energy and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and CF Industries
The main advantage of trading using opposite CenterPoint Energy and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.| CenterPoint Energy vs. DTE Energy | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Pinnacle West Capital |
| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. FMC Corporation |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Transaction History View history of all your transactions and understand their impact on performance |