Correlation Between Kenon Holdings and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings 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 Kenon Holdings and CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and CenterPoint Energy, you can compare the effects of market volatilities on Kenon Holdings 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 Kenon Holdings with a short position of CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and CenterPoint Energy.
Diversification Opportunities for Kenon Holdings and CenterPoint Energy
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kenon and CenterPoint is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy and Kenon Holdings 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 Kenon Holdings 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 Kenon Holdings i.e., Kenon Holdings and CenterPoint Energy go up and down completely randomly.
Pair Corralation between Kenon Holdings and CenterPoint Energy
Considering the 90-day investment horizon Kenon Holdings is expected to generate 2.36 times less return on investment than CenterPoint Energy. In addition to that, Kenon Holdings is 1.23 times more volatile than CenterPoint Energy. It trades about 0.11 of its total potential returns per unit of risk. CenterPoint Energy is currently generating about 0.33 per unit of volatility. If you would invest 2,923 in CenterPoint Energy on August 30, 2024 and sell it today you would earn a total of 343.00 from holding CenterPoint Energy or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenon Holdings vs. CenterPoint Energy
Performance |
| Timeline |
| Kenon Holdings |
| CenterPoint Energy |
Kenon Holdings and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and CenterPoint Energy
The main advantage of trading using opposite Kenon Holdings and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings 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.| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta Corp |
| CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Exelon | CenterPoint Energy vs. Evergy, | 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |