Correlation Between CenterPoint Energy and KVH Industries
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and KVH 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 KVH 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 KVH Industries, you can compare the effects of market volatilities on CenterPoint Energy and KVH 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and KVH Industries.
Diversification Opportunities for CenterPoint Energy and KVH Industries
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CenterPoint and KVH is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and KVH Industries go up and down completely randomly.
Pair Corralation between CenterPoint Energy and KVH Industries
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 2.27 times less return on investment than KVH Industries. But when comparing it to its historical volatility, CenterPoint Energy is 1.51 times less risky than KVH Industries. It trades about 0.37 of its potential returns per unit of risk. KVH Industries is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 457.00 in KVH Industries on September 5, 2024 and sell it today you would earn a total of 127.00 from holding KVH Industries or generate 27.79% 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. KVH Industries
Performance |
| Timeline |
| CenterPoint Energy |
| KVH Industries |
CenterPoint Energy and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and KVH Industries
The main advantage of trading using opposite CenterPoint Energy and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, KVH 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 KVH Industries will offset losses from the drop in KVH 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 |
| KVH Industries vs. Cambium Networks Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and | KVH Industries vs. ADTRAN Inc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |