Correlation Between Brunswick Corp and CMS Energy
Can any of the company-specific risk be diversified away by investing in both Brunswick Corp 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 Brunswick Corp and CMS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick Corp and CMS Energy Corp, you can compare the effects of market volatilities on Brunswick Corp 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 Brunswick Corp with a short position of CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick Corp and CMS Energy.
Diversification Opportunities for Brunswick Corp and CMS Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brunswick and CMS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick Corp 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 Brunswick Corp 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 Brunswick Corp 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 Brunswick Corp i.e., Brunswick Corp and CMS Energy go up and down completely randomly.
Pair Corralation between Brunswick Corp and CMS Energy
Assuming the 90 days horizon Brunswick Corp is expected to generate 1.01 times less return on investment than CMS Energy. In addition to that, Brunswick Corp is 1.39 times more volatile than CMS Energy Corp. It trades about 0.03 of its total potential returns per unit of risk. CMS Energy Corp is currently generating about 0.05 per unit of volatility. If you would invest 2,372 in CMS Energy Corp on August 31, 2024 and sell it today you would earn a total of 60.00 from holding CMS Energy Corp or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick Corp vs. CMS Energy Corp
Performance |
| Timeline |
| Brunswick Corp |
| CMS Energy Corp |
Brunswick Corp and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick Corp and CMS Energy
The main advantage of trading using opposite Brunswick Corp and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick Corp 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.| Brunswick Corp vs. BRP Inc | Brunswick Corp vs. Vision Marine Technologies | Brunswick Corp vs. EZGO Technologies | Brunswick Corp vs. Harley Davidson |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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