Correlation Between United Utilities and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both United Utilities 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 United Utilities and CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and CenterPoint Energy, you can compare the effects of market volatilities on United Utilities 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 United Utilities with a short position of CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and CenterPoint Energy.
Diversification Opportunities for United Utilities and CenterPoint Energy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and CenterPoint is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy and United Utilities 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 United Utilities Group 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 United Utilities i.e., United Utilities and CenterPoint Energy go up and down completely randomly.
Pair Corralation between United Utilities and CenterPoint Energy
If you would invest 3,105 in CenterPoint Energy on November 5, 2024 and sell it today you would earn a total of 152.00 from holding CenterPoint Energy or generate 4.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. CenterPoint Energy
Performance |
| Timeline |
| United Utilities |
| CenterPoint Energy |
United Utilities and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and CenterPoint Energy
The main advantage of trading using opposite United Utilities and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities 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.| United Utilities vs. Artesian Resources | United Utilities vs. Global Water Resources | United Utilities vs. Essential Utilities | United Utilities vs. American Water Works |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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