Correlation Between KVH Industries and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both KVH Industries 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 KVH Industries and CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KVH Industries and CenterPoint Energy, you can compare the effects of market volatilities on KVH Industries 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 KVH Industries with a short position of CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and CenterPoint Energy.
Diversification Opportunities for KVH Industries and CenterPoint Energy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KVH and CenterPoint is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy and KVH Industries 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 KVH Industries 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 KVH Industries i.e., KVH Industries and CenterPoint Energy go up and down completely randomly.
Pair Corralation between KVH Industries and CenterPoint Energy
Given the investment horizon of 90 days KVH Industries is expected to generate 1.51 times more return on investment than CenterPoint Energy. However, KVH Industries is 1.51 times more volatile than CenterPoint Energy. It trades about 0.56 of its potential returns per unit of risk. CenterPoint Energy is currently generating about 0.37 per unit of risk. If you would invest 457.00 in KVH Industries on September 5, 2024 and sell it today you would earn a total of 127.00 from holding KVH Industries or generate 27.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KVH Industries vs. CenterPoint Energy
Performance |
| Timeline |
| KVH Industries |
| CenterPoint Energy |
KVH Industries and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KVH Industries and CenterPoint Energy
The main advantage of trading using opposite KVH Industries and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries 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.| KVH Industries vs. Cambium Networks Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and | KVH Industries vs. ADTRAN Inc |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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