Correlation Between Consumers Energy and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both Consumers Energy and Mfs Utilities 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 Consumers Energy and Mfs Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumers Energy and Mfs Utilities Fund, you can compare the effects of market volatilities on Consumers Energy and Mfs Utilities 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 Consumers Energy with a short position of Mfs Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumers Energy and Mfs Utilities.
Diversification Opportunities for Consumers Energy and Mfs Utilities
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consumers and Mfs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Consumers Energy and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities and Consumers Energy 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 Consumers Energy are associated (or correlated) with Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Consumers Energy i.e., Consumers Energy and Mfs Utilities go up and down completely randomly.
Pair Corralation between Consumers Energy and Mfs Utilities
Assuming the 90 days trading horizon Consumers Energy is expected to generate 1.79 times less return on investment than Mfs Utilities. In addition to that, Consumers Energy is 1.62 times more volatile than Mfs Utilities Fund. It trades about 0.01 of its total potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.02 per unit of volatility. If you would invest 2,344 in Mfs Utilities Fund on August 29, 2024 and sell it today you would earn a total of 155.00 from holding Mfs Utilities Fund or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumers Energy vs. Mfs Utilities Fund
Performance |
| Timeline |
| Consumers Energy |
| Mfs Utilities |
Consumers Energy and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumers Energy and Mfs Utilities
The main advantage of trading using opposite Consumers Energy and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumers Energy position performs unexpectedly, Mfs Utilities 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 Mfs Utilities will offset losses from the drop in Mfs Utilities' long position.| Consumers Energy vs. Nextera Energy | Consumers Energy vs. Duke Energy | Consumers Energy vs. PGE Corp | Consumers Energy vs. Southern Company |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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