Correlation Between Argo Group and CMS Energy
Can any of the company-specific risk be diversified away by investing in both Argo Group 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 Argo Group and CMS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Group 65 and CMS Energy Corp, you can compare the effects of market volatilities on Argo Group 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 Argo Group with a short position of CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and CMS Energy.
Diversification Opportunities for Argo Group and CMS Energy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Argo and CMS is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group 65 and CMS Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy Corp and Argo Group 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 Argo Group 65 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 Corp has no effect on the direction of Argo Group i.e., Argo Group and CMS Energy go up and down completely randomly.
Pair Corralation between Argo Group and CMS Energy
Given the investment horizon of 90 days Argo Group 65 is expected to under-perform the CMS Energy. In addition to that, Argo Group is 1.91 times more volatile than CMS Energy Corp. It trades about -0.36 of its total potential returns per unit of risk. CMS Energy Corp is currently generating about -0.14 per unit of volatility. If you would invest 2,322 in CMS Energy Corp on January 7, 2025 and sell it today you would lose (39.00) from holding CMS Energy Corp or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argo Group 65 vs. CMS Energy Corp
Performance |
| Timeline |
| Argo Group 65 |
| CMS Energy Corp |
Argo Group and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Group and CMS Energy
The main advantage of trading using opposite Argo Group and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Group 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.| Argo Group vs. Brighthouse Financial | Argo Group vs. American Financial Group | Argo Group vs. CMS Energy Corp | Argo Group vs. Aegon Funding |
| CMS Energy vs. CMS Energy Corp | CMS Energy vs. CMS Energy Corp | CMS Energy vs. Duke Energy Corp | CMS Energy vs. American Financial Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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