Correlation Between CENTRAL PUERTO and CMS Energy
Can any of the company-specific risk be diversified away by investing in both CENTRAL PUERTO 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 CENTRAL PUERTO and CMS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CENTRAL PUERTO ADR1 and CMS Energy, you can compare the effects of market volatilities on CENTRAL PUERTO 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 CENTRAL PUERTO with a short position of CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTRAL PUERTO and CMS Energy.
Diversification Opportunities for CENTRAL PUERTO and CMS Energy
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CENTRAL and CMS is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CENTRAL PUERTO ADR1 and CMS Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy and CENTRAL PUERTO 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 CENTRAL PUERTO ADR1 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 CENTRAL PUERTO i.e., CENTRAL PUERTO and CMS Energy go up and down completely randomly.
Pair Corralation between CENTRAL PUERTO and CMS Energy
Assuming the 90 days trading horizon CENTRAL PUERTO ADR1 is expected to generate 3.0 times more return on investment than CMS Energy. However, CENTRAL PUERTO is 3.0 times more volatile than CMS Energy. It trades about 0.39 of its potential returns per unit of risk. CMS Energy is currently generating about 0.04 per unit of risk. If you would invest 1,095 in CENTRAL PUERTO ADR1 on September 13, 2024 and sell it today you would earn a total of 285.00 from holding CENTRAL PUERTO ADR1 or generate 26.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CENTRAL PUERTO ADR1 vs. CMS Energy
Performance |
| Timeline |
| CENTRAL PUERTO ADR1 |
| CMS Energy |
CENTRAL PUERTO and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CENTRAL PUERTO and CMS Energy
The main advantage of trading using opposite CENTRAL PUERTO and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTRAL PUERTO 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.| CENTRAL PUERTO vs. Eidesvik Offshore ASA | CENTRAL PUERTO vs. ECHO INVESTMENT ZY | CENTRAL PUERTO vs. REGAL ASIAN INVESTMENTS | CENTRAL PUERTO vs. REINET INVESTMENTS SCA |
| CMS Energy vs. Gold Road Resources | CMS Energy vs. GOLD ROAD RES | CMS Energy vs. INTERSHOP Communications Aktiengesellschaft | CMS Energy vs. TRAINLINE PLC LS |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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