Correlation Between Exelon and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both Exelon and CenterPoint Energy 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 Exelon and CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelon and CenterPoint Energy, you can compare the effects of market volatilities on Exelon and CenterPoint Energy 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 Exelon with a short position of CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelon and CenterPoint Energy.
Diversification Opportunities for Exelon and CenterPoint Energy
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exelon and CenterPoint is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Exelon and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy and Exelon 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 Exelon are associated (or correlated) with CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of Exelon i.e., Exelon and CenterPoint Energy go up and down completely randomly.
Pair Corralation between Exelon and CenterPoint Energy
Considering the 90-day investment horizon Exelon is expected to generate 0.94 times more return on investment than CenterPoint Energy. However, Exelon is 1.07 times less risky than CenterPoint Energy. It trades about 0.27 of its potential returns per unit of risk. CenterPoint Energy is currently generating about 0.11 per unit of risk. If you would invest 3,719 in Exelon on October 20, 2024 and sell it today you would earn a total of 223.00 from holding Exelon or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exelon vs. CenterPoint Energy
Performance |
| Timeline |
| Exelon |
| CenterPoint Energy |
Exelon and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exelon and CenterPoint Energy
The main advantage of trading using opposite Exelon and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelon position performs unexpectedly, CenterPoint Energy 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy's long position.| Exelon vs. Duke Energy | Exelon vs. Dominion Energy | Exelon vs. Southern Company | Exelon vs. Consolidated Edison |
| CenterPoint Energy vs. DTE Energy | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Pinnacle West Capital |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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