Correlation Between CenterPoint Energy and NiSource
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and NiSource 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 CenterPoint Energy and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and NiSource, you can compare the effects of market volatilities on CenterPoint Energy and NiSource 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 CenterPoint Energy with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and NiSource.
Diversification Opportunities for CenterPoint Energy and NiSource
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CenterPoint and NiSource is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and CenterPoint 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 CenterPoint Energy are associated (or correlated) with NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and NiSource go up and down completely randomly.
Pair Corralation between CenterPoint Energy and NiSource
Assuming the 90 days horizon CenterPoint Energy is expected to generate 1.42 times more return on investment than NiSource. However, CenterPoint Energy is 1.42 times more volatile than NiSource. It trades about 0.22 of its potential returns per unit of risk. NiSource is currently generating about 0.21 per unit of risk. If you would invest 2,502 in CenterPoint Energy on September 25, 2024 and sell it today you would earn a total of 578.00 from holding CenterPoint Energy or generate 23.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.46% |
Values | Daily Returns |
CenterPoint Energy vs. NiSource
Performance |
Timeline |
CenterPoint Energy |
NiSource |
CenterPoint Energy and NiSource Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CenterPoint Energy and NiSource
The main advantage of trading using opposite CenterPoint Energy and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, NiSource 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 NiSource will offset losses from the drop in NiSource's long position.CenterPoint Energy vs. Snam SpA | CenterPoint Energy vs. Atmos Energy | CenterPoint Energy vs. NiSource | CenterPoint Energy vs. China Resources Gas |
NiSource vs. CenterPoint Energy | NiSource vs. Snam SpA | NiSource vs. Atmos Energy | NiSource vs. China Resources Gas |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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