Correlation Between CenterPoint Energy and UNION
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By analyzing existing cross correlation between CenterPoint Energy and UNION ELEC 4, you can compare the effects of market volatilities on CenterPoint Energy and UNION 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 UNION. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and UNION.
Diversification Opportunities for CenterPoint Energy and UNION
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CenterPoint and UNION is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and UNION ELEC 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNION ELEC 4 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 UNION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNION ELEC 4 has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and UNION go up and down completely randomly.
Pair Corralation between CenterPoint Energy and UNION
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 1.96 times less return on investment than UNION. In addition to that, CenterPoint Energy is 1.21 times more volatile than UNION ELEC 4. It trades about 0.17 of its total potential returns per unit of risk. UNION ELEC 4 is currently generating about 0.41 per unit of volatility. If you would invest 7,979 in UNION ELEC 4 on September 13, 2024 and sell it today you would earn a total of 293.00 from holding UNION ELEC 4 or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 47.62% |
| Values | Daily Returns |
CenterPoint Energy vs. UNION ELEC 4
Performance |
| Timeline |
| CenterPoint Energy |
| UNION ELEC 4 |
CenterPoint Energy and UNION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and UNION
The main advantage of trading using opposite CenterPoint Energy and UNION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, UNION 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 UNION will offset losses from the drop in UNION's long position.| CenterPoint Energy vs. Duke Energy | CenterPoint Energy vs. American Electric Power | CenterPoint Energy vs. Nextera Energy | CenterPoint Energy vs. Southern Company |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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