Correlation Between CenterPoint Energy and Visteon Corp
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and Visteon 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 Visteon 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 Visteon Corp, you can compare the effects of market volatilities on CenterPoint Energy and Visteon 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 Visteon Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and Visteon Corp.
Diversification Opportunities for CenterPoint Energy and Visteon Corp
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CenterPoint and Visteon is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and Visteon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visteon Corp 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 Visteon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visteon Corp has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and Visteon Corp go up and down completely randomly.
Pair Corralation between CenterPoint Energy and Visteon Corp
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 0.76 times more return on investment than Visteon Corp. However, CenterPoint Energy is 1.31 times less risky than Visteon Corp. It trades about 0.34 of its potential returns per unit of risk. Visteon Corp is currently generating about 0.09 per unit of risk. If you would invest 2,933 in CenterPoint Energy on September 1, 2024 and sell it today you would earn a total of 329.00 from holding CenterPoint Energy or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CenterPoint Energy vs. Visteon Corp
Performance |
| Timeline |
| CenterPoint Energy |
| Visteon Corp |
CenterPoint Energy and Visteon Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and Visteon Corp
The main advantage of trading using opposite CenterPoint Energy and Visteon Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, Visteon 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 Visteon Corp will offset losses from the drop in Visteon 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 |
| Visteon Corp vs. Ford Motor | Visteon Corp vs. General Motors | Visteon Corp vs. Goodyear Tire Rubber | Visteon Corp vs. Li Auto |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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