Correlation Between CMS Energy and Companhia Energetica
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Companhia Energetica 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 CMS Energy and Companhia Energetica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Companhia Energetica de, you can compare the effects of market volatilities on CMS Energy and Companhia Energetica 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 CMS Energy with a short position of Companhia Energetica. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Companhia Energetica.
Diversification Opportunities for CMS Energy and Companhia Energetica
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CMS and Companhia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Companhia Energetica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energetica and CMS 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 CMS Energy are associated (or correlated) with Companhia Energetica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energetica has no effect on the direction of CMS Energy i.e., CMS Energy and Companhia Energetica go up and down completely randomly.
Pair Corralation between CMS Energy and Companhia Energetica
Assuming the 90 days trading horizon CMS Energy is expected to under-perform the Companhia Energetica. But the preferred stock apears to be less risky and, when comparing its historical volatility, CMS Energy is 2.53 times less risky than Companhia Energetica. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Companhia Energetica de is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 195.00 in Companhia Energetica de on August 30, 2024 and sell it today you would earn a total of 11.00 from holding Companhia Energetica de or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy vs. Companhia Energetica de
Performance |
| Timeline |
| CMS Energy |
| Companhia Energetica |
CMS Energy and Companhia Energetica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Companhia Energetica
The main advantage of trading using opposite CMS Energy and Companhia Energetica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Companhia Energetica 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 Companhia Energetica will offset losses from the drop in Companhia Energetica's long position.| CMS Energy vs. Entergy Texas | CMS Energy vs. Duke Energy | CMS Energy vs. Spire Inc | CMS Energy vs. Consumers Energy |
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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 Stocks Directory module to find actively traded stocks across global markets.
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