Correlation Between CenterPoint Energy and NCR Corp
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and NCR Corp 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 NCR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and NCR Corp Pref, you can compare the effects of market volatilities on CenterPoint Energy and NCR Corp 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 NCR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and NCR Corp.
Diversification Opportunities for CenterPoint Energy and NCR Corp
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CenterPoint and NCR is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and NCR Corp Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCR Corp Pref 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 NCR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCR Corp Pref has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and NCR Corp go up and down completely randomly.
Pair Corralation between CenterPoint Energy and NCR Corp
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 2.8 times more return on investment than NCR Corp. However, CenterPoint Energy is 2.8 times more volatile than NCR Corp Pref. It trades about 0.05 of its potential returns per unit of risk. NCR Corp Pref is currently generating about -0.02 per unit of risk. If you would invest 2,823 in CenterPoint Energy on September 4, 2024 and sell it today you would earn a total of 390.00 from holding CenterPoint Energy or generate 13.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 65.59% |
| Values | Daily Returns |
CenterPoint Energy vs. NCR Corp Pref
Performance |
| Timeline |
| CenterPoint Energy |
| NCR Corp Pref |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CenterPoint Energy and NCR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and NCR Corp
The main advantage of trading using opposite CenterPoint Energy and NCR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, NCR Corp 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 NCR Corp will offset losses from the drop in NCR Corp's long position.| CenterPoint Energy vs. DTE Energy | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Pinnacle West Capital |
| NCR Corp vs. Mesa Air Group | NCR Corp vs. Southwest Airlines | NCR Corp vs. CenterPoint Energy | NCR Corp vs. Archrock |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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