Correlation Between ENN Energy and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both ENN Energy 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 ENN Energy and CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENN Energy Holdings and CenterPoint Energy, you can compare the effects of market volatilities on ENN Energy 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 ENN Energy with a short position of CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENN Energy and CenterPoint Energy.
Diversification Opportunities for ENN Energy and CenterPoint Energy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENN and CenterPoint is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ENN Energy Holdings and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy and ENN Energy 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 ENN Energy 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 ENN Energy i.e., ENN Energy and CenterPoint Energy go up and down completely randomly.
Pair Corralation between ENN Energy and CenterPoint Energy
Assuming the 90 days trading horizon ENN Energy Holdings is expected to generate 2.6 times more return on investment than CenterPoint Energy. However, ENN Energy is 2.6 times more volatile than CenterPoint Energy. It trades about 0.07 of its potential returns per unit of risk. CenterPoint Energy is currently generating about 0.06 per unit of risk. If you would invest 370.00 in ENN Energy Holdings on September 3, 2024 and sell it today you would earn a total of 255.00 from holding ENN Energy Holdings or generate 68.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENN Energy Holdings vs. CenterPoint Energy
Performance |
| Timeline |
| ENN Energy Holdings |
| CenterPoint Energy |
ENN Energy and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENN Energy and CenterPoint Energy
The main advantage of trading using opposite ENN Energy and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENN Energy 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.| ENN Energy vs. Harmony Gold Mining | ENN Energy vs. MCEWEN MINING INC | ENN Energy vs. ARISTOCRAT LEISURE | ENN Energy vs. JD SPORTS FASH |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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