Correlation Between CenterPoint Energy and Radcom
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and Radcom 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 Radcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and Radcom, you can compare the effects of market volatilities on CenterPoint Energy and Radcom 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 Radcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and Radcom.
Diversification Opportunities for CenterPoint Energy and Radcom
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CenterPoint and Radcom is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom 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 Radcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radcom has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and Radcom go up and down completely randomly.
Pair Corralation between CenterPoint Energy and Radcom
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 0.33 times more return on investment than Radcom. However, CenterPoint Energy is 3.04 times less risky than Radcom. It trades about 0.52 of its potential returns per unit of risk. Radcom is currently generating about 0.16 per unit of risk. If you would invest 2,839 in CenterPoint Energy on September 2, 2024 and sell it today you would earn a total of 423.00 from holding CenterPoint Energy or generate 14.9% 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. Radcom
Performance |
| Timeline |
| CenterPoint Energy |
| Radcom |
CenterPoint Energy and Radcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and Radcom
The main advantage of trading using opposite CenterPoint Energy and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, Radcom 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 Radcom will offset losses from the drop in Radcom'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 |
| Radcom vs. Comtech Telecommunications Corp | Radcom vs. KVH Industries | Radcom vs. Silicom | Radcom vs. Knowles Cor |
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.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |