Correlation Between CenterPoint Energy and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and Franklin Utilities 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 Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and Franklin Utilities Fund, you can compare the effects of market volatilities on CenterPoint Energy and Franklin Utilities 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 Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and Franklin Utilities.
Diversification Opportunities for CenterPoint Energy and Franklin Utilities
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CenterPoint and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities 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 Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and Franklin Utilities go up and down completely randomly.
Pair Corralation between CenterPoint Energy and Franklin Utilities
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 1.39 times less return on investment than Franklin Utilities. In addition to that, CenterPoint Energy is 1.29 times more volatile than Franklin Utilities Fund. It trades about 0.07 of its total potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.12 per unit of volatility. If you would invest 1,891 in Franklin Utilities Fund on September 1, 2024 and sell it today you would earn a total of 707.00 from holding Franklin Utilities Fund or generate 37.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CenterPoint Energy vs. Franklin Utilities Fund
Performance |
| Timeline |
| CenterPoint Energy |
| Franklin Utilities |
CenterPoint Energy and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and Franklin Utilities
The main advantage of trading using opposite CenterPoint Energy and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, Franklin Utilities 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 Franklin Utilities will offset losses from the drop in Franklin Utilities' long position.| CenterPoint Energy vs. DTE Energy | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Pinnacle West Capital |
| Franklin Utilities vs. Fidelity Advisor 529 | Franklin Utilities vs. The Hartford Inflation | Franklin Utilities vs. Western Asset Inflation | Franklin Utilities vs. Ab Bond Inflation |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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