Correlation Between CenterPoint Energy and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and Companhia Paranaense 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 Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and Companhia Paranaense de, you can compare the effects of market volatilities on CenterPoint Energy and Companhia Paranaense 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 Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and Companhia Paranaense.
Diversification Opportunities for CenterPoint Energy and Companhia Paranaense
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CenterPoint and Companhia is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense 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 Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and Companhia Paranaense go up and down completely randomly.
Pair Corralation between CenterPoint Energy and Companhia Paranaense
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 0.61 times more return on investment than Companhia Paranaense. However, CenterPoint Energy is 1.63 times less risky than Companhia Paranaense. It trades about 0.05 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.05 per unit of risk. If you would invest 2,798 in CenterPoint Energy on August 27, 2024 and sell it today you would earn a total of 395.00 from holding CenterPoint Energy or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 92.34% |
| Values | Daily Returns |
CenterPoint Energy vs. Companhia Paranaense de
Performance |
| Timeline |
| CenterPoint Energy |
| Companhia Paranaense |
CenterPoint Energy and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and Companhia Paranaense
The main advantage of trading using opposite CenterPoint Energy and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense's long position.| CenterPoint Energy vs. Entergy | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Pinnacle West Capital |
| Companhia Paranaense vs. Sonida Senior Living | Companhia Paranaense vs. HF Sinclair Corp | Companhia Paranaense vs. Mayfair Gold Corp | Companhia Paranaense vs. Teleflex Incorporated |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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