Centerpoint Energy Stock Volatility
| CNP Stock | USD 28.78 0.25 0.88% |
We consider CenterPoint Energy very steady. CenterPoint Energy secures Sharpe Ratio (or Efficiency) of 0.0998, which signifies that the company had a 0.0998% return per unit of risk over the last 3 months. We have found twenty-eight technical indicators for CenterPoint Energy, which you can use to evaluate the volatility of the firm. Please confirm CenterPoint Energy's Mean Deviation of 0.8061, downside deviation of 1.06, and Risk Adjusted Performance of 0.0278 to double-check if the risk estimate we provide is consistent with the expected return of 0.11%. Key indicators related to CenterPoint Energy's volatility include:
270 Days Market Risk | Chance Of Distress | 270 Days Economic Sensitivity |
CenterPoint Energy Stock volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of CenterPoint daily returns, and it is calculated using variance and standard deviation. We also use CenterPoint's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of CenterPoint Energy volatility.
CenterPoint |
ESG Sustainability
While most ESG disclosures are voluntary, CenterPoint Energy's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to CenterPoint Energy's managers and investors.Environment Score | Governance Score | Social Score |
Since volatility provides investors with entry points to take advantage of stock prices, companies, such as CenterPoint Energy can benefit from it. Downward market volatility can be a perfect environment for investors who play the long game. Here, they may decide to buy additional stocks of CenterPoint Energy at lower prices. For example, an investor can purchase CenterPoint stock that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of CenterPoint Energy's stock rises, investors can sell out and invest the proceeds in other equities with better opportunities. Investing when markets are volatile with better valuations will accord both investors and companies the opportunity to generate better long-term returns.
Moving together with CenterPoint Stock
| 0.63 | D | Dominion Energy Financial Report 3rd of May 2024 | PairCorr |
| 0.71 | ED | Consolidated Edison Financial Report 2nd of May 2024 | PairCorr |
| 0.68 | ES | Eversource Energy Financial Report 1st of May 2024 | PairCorr |
| 0.64 | FE | FirstEnergy Earnings Call This Week | PairCorr |
| 0.68 | SO | Southern Financial Report 25th of April 2024 | PairCorr |
CenterPoint Energy Market Sensitivity And Downside Risk
CenterPoint Energy's beta coefficient measures the volatility of CenterPoint stock compared to the systematic risk of the entire market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents CenterPoint stock's returns against your selected market. In other words, CenterPoint Energy's beta of 0.82 provides an investor with an approximation of how much risk CenterPoint Energy stock can potentially add to one of your existing portfolios. CenterPoint Energy has relatively low volatility with skewness of 0.35 and kurtosis of 1.83. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure CenterPoint Energy's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact CenterPoint Energy's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different financial instruments as prices fall.
3 Months Beta |Analyze CenterPoint Energy Demand TrendCheck current 90 days CenterPoint Energy correlation with market (NYSE Composite)CenterPoint Beta |
CenterPoint standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. A typical volatile entity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.
Standard Deviation | 1.13 |
It is essential to understand the difference between upside risk (as represented by CenterPoint Energy's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of CenterPoint Energy's daily returns or price. Since the actual investment returns on holding a position in centerpoint stock tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in CenterPoint Energy.
Using CenterPoint Put Option to Manage Risk
Put options written on CenterPoint Energy grant holders of the option the right to sell a specified amount of CenterPoint Energy at a specified price within a specified time frame. The put buyer has a limited loss and, while not fully unlimited gains, as the price of CenterPoint Stock cannot fall below zero, the put buyer does gain as the price drops. So, one way investors can hedge CenterPoint Energy's position is by buying a put option against it. The put option used this way is usually referred to as insurance. If an undesired outcome occurs and loss on holding CenterPoint Energy will be realized, the loss incurred will be offset by the profits made with the option trade.
CenterPoint Energy's PUT expiring on 2024-05-17
Profit |
| CenterPoint Energy Price At Expiration |
Current CenterPoint Energy Insurance Chain
| Delta | Gamma | Open Int | Expiration | Current Spread | Last Price | |||
Put | 2024-05-17 PUT at $31.0 | -0.7569 | 0.1011 | 1 | 2024-05-17 | 1.55 - 2.85 | 3.2 | View |
Put | 2024-05-17 PUT at $30.0 | -0.7468 | 0.1605 | 3 | 2024-05-17 | 1.65 - 1.8 | 1.97 | View |
Put | 2024-05-17 PUT at $29.0 | -0.5684 | 0.1932 | 39 | 2024-05-17 | 0.9 - 1.05 | 1.05 | View |
Put | 2024-05-17 PUT at $28.0 | -0.36 | 0.2111 | 104 | 2024-05-17 | 0.4 - 0.5 | 0.55 | View |
Put | 2024-05-17 PUT at $27.0 | -0.1868 | 0.1469 | 119 | 2024-05-17 | 0.15 - 0.25 | 0.2 | View |
Put | 2024-05-17 PUT at $26.0 | -0.0906 | 0.0786 | 61 | 2024-05-17 | 0.05 - 0.15 | 0.09 | View |
CenterPoint Energy Stock Volatility Analysis
Volatility refers to the frequency at which CenterPoint Energy stock price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with CenterPoint Energy's price changes. Investors will then calculate the volatility of CenterPoint Energy's stock to predict their future moves. A stock that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A stock with relatively stable price changes has low volatility. A highly volatile stock is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of CenterPoint Energy's volatility:
Historical Volatility
This type of stock volatility measures CenterPoint Energy's fluctuations based on previous trends. It's commonly used to predict CenterPoint Energy's future behavior based on its past. However, it cannot conclusively determine the future direction of the stock.Implied Volatility
This type of volatility provides a positive outlook on future price fluctuations for CenterPoint Energy's current market price. This means that the stock will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on CenterPoint Energy's to be redeemed at a future date.Transformation |
The output start index for this execution was zero with a total number of output elements of sixty-one. CenterPoint Energy Average Price is the average of the sum of open, high, low and close daily prices of a bar. It can be used to smooth an indicator that normally takes just the closing price as input.
CenterPoint Energy Projected Return Density Against Market
Considering the 90-day investment horizon CenterPoint Energy has a beta of 0.8159 suggesting as returns on the market go up, CenterPoint Energy average returns are expected to increase less than the benchmark. However, during the bear market, the loss on holding CenterPoint Energy will be expected to be much smaller as well.Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to CenterPoint Energy or Multi-Utilities sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that CenterPoint Energy's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a CenterPoint stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
CenterPoint Energy has a negative alpha, implying that the risk taken by holding this instrument is not justified. The company is significantly underperforming the NYSE Composite. Predicted Return Density |
| Returns |
What Drives a CenterPoint Energy Price Volatility?
Several factors can influence a stock's market volatility:Industry
Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.Political and Economic environment
When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.The Company's Performance
Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.CenterPoint Energy Stock Risk Measures
Considering the 90-day investment horizon the coefficient of variation of CenterPoint Energy is 1001.8. The daily returns are distributed with a variance of 1.28 and standard deviation of 1.13. The mean deviation of CenterPoint Energy is currently at 0.82. For similar time horizon, the selected benchmark (NYSE Composite) has volatility of 0.61
α | Alpha over NYSE Composite | -0.03 | |
β | Beta against NYSE Composite | 0.82 | |
σ | Overall volatility | 1.13 | |
Ir | Information ratio | -0.04 |
CenterPoint Energy Stock Return Volatility
CenterPoint Energy historical daily return volatility represents how much of CenterPoint Energy stock's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. The enterprise has volatility of 1.131% on return distribution over 90 days investment horizon. By contrast, NYSE Composite accepts 0.6294% volatility on return distribution over the 90 days horizon. Performance |
| Timeline |
About CenterPoint Energy Volatility
Volatility is a rate at which the price of CenterPoint Energy or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of CenterPoint Energy may increase or decrease. In other words, similar to CenterPoint's beta indicator, it measures the risk of CenterPoint Energy and helps estimate the fluctuations that may happen in a short period of time. So if prices of CenterPoint Energy fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.| Last Reported | Projected for Next Year | ||
| Market Cap | 10.3 B | 10.9 B |
CenterPoint Energy's stock volatility refers to the amount of uncertainty or risk involved with the size of changes in its stock's price. It is a statistical measure of the dispersion of returns on CenterPoint Stock over a specified period of time, often expressed as the standard deviation of daily returns. In other words, it measures how much CenterPoint Energy's price varies over time.
3 ways to utilize CenterPoint Energy's volatility to invest better
Higher CenterPoint Energy's stock volatility means that the price of its stock is changing rapidly and unpredictably, while lower stock volatility indicates that the price of CenterPoint Energy stock is relatively stable. Investors and traders use stock volatility as an indicator of risk and potential reward, as stocks with higher volatility can offer the potential for more significant returns but also come with a greater risk of losses. CenterPoint Energy stock volatility can provide helpful information for making investment decisions in the following ways:- Measuring Risk: Volatility can be used as a measure of risk, which can help you determine the potential fluctuations in the value of CenterPoint Energy investment. A higher volatility means higher risk and potentially larger changes in value.
- Identifying Opportunities: High volatility in CenterPoint Energy's stock can indicate that there is potential for significant price movements, either up or down, which could present investment opportunities.
- Diversification: Understanding how the volatility of CenterPoint Energy's stock relates to your other investments can help you create a well-diversified portfolio of assets with varying levels of risk.
CenterPoint Energy Investment Opportunity
CenterPoint Energy has a volatility of 1.13 and is 1.79 times more volatile than NYSE Composite. 9 percent of all equities and portfolios are less risky than CenterPoint Energy. You can use CenterPoint Energy to enhance the returns of your portfolios. The stock experiences a moderate upward volatility. Check odds of CenterPoint Energy to be traded at $31.66 in 90 days.Very weak diversification
The correlation between CenterPoint Energy and NYA is 0.44 (i.e., Very weak diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and NYA in the same portfolio, assuming nothing else is changed.
CenterPoint Energy Additional Risk Indicators
The analysis of CenterPoint Energy's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in CenterPoint Energy's investment and either accepting that risk or mitigating it. Along with some common measures of CenterPoint Energy stock's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
| Risk Adjusted Performance | 0.0278 | |||
| Market Risk Adjusted Performance | 0.0501 | |||
| Mean Deviation | 0.8061 | |||
| Semi Deviation | 0.9766 | |||
| Downside Deviation | 1.06 | |||
| Coefficient Of Variation | 2625.83 | |||
| Standard Deviation | 1.12 |
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stocks, we recommend comparing similar stocks with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.
CenterPoint Energy Suggested Diversification Pairs
Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against CenterPoint Energy as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. CenterPoint Energy's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, CenterPoint Energy's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to CenterPoint Energy.
When determining whether CenterPoint Energy is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if CenterPoint Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Centerpoint Energy Stock. Highlighted below are key reports to facilitate an investment decision about Centerpoint Energy Stock: Check out Trending Equities to better understand how to build diversified portfolios, which includes a position in CenterPoint Energy. Also, note that the market value of any company could be tightly coupled with the direction of predictive economic indicators such as signals in board of governors. To learn how to invest in CenterPoint Stock, please use our How to Invest in CenterPoint Energy guide.You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Complementary Tools for CenterPoint Stock analysis
When running CenterPoint Energy's price analysis, check to measure CenterPoint Energy's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy CenterPoint Energy is operating at the current time. Most of CenterPoint Energy's value examination focuses on studying past and present price action to predict the probability of CenterPoint Energy's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move CenterPoint Energy's price. Additionally, you may evaluate how the addition of CenterPoint Energy to your portfolios can decrease your overall portfolio volatility.
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Is CenterPoint Energy's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of CenterPoint Energy. If investors know CenterPoint will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about CenterPoint Energy listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.586 | Dividend Share 0.77 | Earnings Share 1.37 | Revenue Per Share 13.782 | Quarterly Revenue Growth (0.20) |
The market value of CenterPoint Energy is measured differently than its book value, which is the value of CenterPoint that is recorded on the company's balance sheet. Investors also form their own opinion of CenterPoint Energy's value that differs from its market value or its book value, called intrinsic value, which is CenterPoint Energy's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because CenterPoint Energy's market value can be influenced by many factors that don't directly affect CenterPoint Energy's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between CenterPoint Energy's value and its price as these two are different measures arrived at by different means. Investors typically determine if CenterPoint Energy is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, CenterPoint Energy's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.