Correlation Between CenterPoint Energy and 908 Devices

Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and 908 Devices 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 908 Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CenterPoint Energy and 908 Devices, you can compare the effects of market volatilities on CenterPoint Energy and 908 Devices 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 908 Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and 908 Devices.

Diversification Opportunities for CenterPoint Energy and 908 Devices

-0.12

Correlation Coefficient

CenterPoint Energy  908 Devices

Good diversification

The 3 months correlation between CenterPoint and 908 is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and 908 Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 908 Devices 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 908 Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 908 Devices has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and 908 Devices go up and down completely randomly.

Pair Corralation between CenterPoint Energy and 908 Devices

Considering the 90-day investment horizon CenterPoint Energy is expected to generate 0.28 times more return on investment than 908 Devices. However, CenterPoint Energy is 3.52 times less risky than 908 Devices. It trades about 0.17 of its potential returns per unit of risk. 908 Devices is currently generating about -0.02 per unit of risk. If you would invest  2,768  in CenterPoint Energy on March 15, 2024 and sell it today you would earn a total of  331.00  from holding CenterPoint Energy or generate 11.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CenterPoint Energy  vs.  908 Devices

CenterPoint Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CenterPoint Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, CenterPoint Energy may actually be approaching a critical reversion point that can send shares even higher in July 2024.

908 Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 908 Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, 908 Devices is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CenterPoint Energy and 908 Devices

The main advantage of trading using opposite CenterPoint Energy and 908 Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, 908 Devices 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 908 Devices will offset losses from the drop in 908 Devices' long position.

The idea behind CenterPoint Energy and 908 Devices pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.