Correlation Between Volkswagen and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and CenterPoint Energy, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and CenterPoint Energy.
Diversification Opportunities for Volkswagen and CenterPoint Energy
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and CenterPoint is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy and Volkswagen 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 Volkswagen AG 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 Volkswagen i.e., Volkswagen and CenterPoint Energy go up and down completely randomly.
Pair Corralation between Volkswagen and CenterPoint Energy
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the CenterPoint Energy. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 1.23 times less risky than CenterPoint Energy. The stock trades about -0.22 of its potential returns per unit of risk. The CenterPoint Energy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,661 in CenterPoint Energy on September 3, 2024 and sell it today you would earn a total of 379.00 from holding CenterPoint Energy or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. CenterPoint Energy
Performance |
| Timeline |
| Volkswagen AG |
| CenterPoint Energy |
Volkswagen and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and CenterPoint Energy
The main advantage of trading using opposite Volkswagen and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. ARDAGH METAL PACDL 0001 | Volkswagen vs. GREENX METALS LTD | Volkswagen vs. Aluminum of | Volkswagen vs. Lion One Metals |
| CenterPoint Energy vs. ENN Energy Holdings | CenterPoint Energy vs. Superior Plus Corp | CenterPoint Energy vs. NMI Holdings | CenterPoint Energy vs. Origin Agritech |
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 Stocks Directory module to find actively traded stocks across global markets.
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