Correlation Between INNOVATEC SPA and CMS Energy
Can any of the company-specific risk be diversified away by investing in both INNOVATEC SPA and CMS 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 INNOVATEC SPA and CMS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOVATEC SPA and CMS Energy, you can compare the effects of market volatilities on INNOVATEC SPA and CMS 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 INNOVATEC SPA with a short position of CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOVATEC SPA and CMS Energy.
Diversification Opportunities for INNOVATEC SPA and CMS Energy
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between INNOVATEC and CMS is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding INNOVATEC SPA and CMS Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy and INNOVATEC SPA 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 INNOVATEC SPA are associated (or correlated) with CMS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMS Energy has no effect on the direction of INNOVATEC SPA i.e., INNOVATEC SPA and CMS Energy go up and down completely randomly.
Pair Corralation between INNOVATEC SPA and CMS Energy
Assuming the 90 days horizon INNOVATEC SPA is expected to generate 3.97 times more return on investment than CMS Energy. However, INNOVATEC SPA is 3.97 times more volatile than CMS Energy. It trades about 0.03 of its potential returns per unit of risk. CMS Energy is currently generating about 0.04 per unit of risk. If you would invest 85.00 in INNOVATEC SPA on September 12, 2024 and sell it today you would earn a total of 1.00 from holding INNOVATEC SPA or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
INNOVATEC SPA vs. CMS Energy
Performance |
| Timeline |
| INNOVATEC SPA |
| CMS Energy |
INNOVATEC SPA and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOVATEC SPA and CMS Energy
The main advantage of trading using opposite INNOVATEC SPA and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOVATEC SPA position performs unexpectedly, CMS 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 CMS Energy will offset losses from the drop in CMS Energy's long position.| INNOVATEC SPA vs. SK TELECOM TDADR | INNOVATEC SPA vs. TSOGO SUN GAMING | INNOVATEC SPA vs. Scientific Games | INNOVATEC SPA vs. EAST SIDE GAMES |
| CMS Energy vs. INTERCONT HOTELS | CMS Energy vs. Dalata Hotel Group | CMS Energy vs. VITEC SOFTWARE GROUP | CMS Energy vs. Constellation Software |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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