Correlation Between CenterPoint Energy and East Resources
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and East Resources 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 East Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and East Resources Acquisition, you can compare the effects of market volatilities on CenterPoint Energy and East Resources 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 East Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and East Resources.
Diversification Opportunities for CenterPoint Energy and East Resources
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CenterPoint and East is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and East Resources Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Resources Acqui 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 East Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Resources Acqui has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and East Resources go up and down completely randomly.
Pair Corralation between CenterPoint Energy and East Resources
If you would invest 2,883 in CenterPoint Energy on September 4, 2024 and sell it today you would earn a total of 316.00 from holding CenterPoint Energy or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
CenterPoint Energy vs. East Resources Acquisition
Performance |
| Timeline |
| CenterPoint Energy |
| East Resources Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CenterPoint Energy and East Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and East Resources
The main advantage of trading using opposite CenterPoint Energy and East Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, East Resources 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 East Resources will offset losses from the drop in East Resources' long position.| CenterPoint Energy vs. DTE Energy | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Pinnacle West Capital |
| East Resources vs. Mannatech Incorporated | East Resources vs. Designer Brands | East Resources vs. Nomura Holdings ADR | East Resources vs. Stepstone Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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