Correlation Between CMS Energy and DTE Energy
Can any of the company-specific risk be diversified away by investing in both CMS Energy and DTE 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 CMS Energy and DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and DTE Energy, you can compare the effects of market volatilities on CMS Energy and DTE 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 CMS Energy with a short position of DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and DTE Energy.
Diversification Opportunities for CMS Energy and DTE Energy
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CMS and DTE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and DTE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy 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 DTE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTE Energy has no effect on the direction of CMS Energy i.e., CMS Energy and DTE Energy go up and down completely randomly.
Pair Corralation between CMS Energy and DTE Energy
Assuming the 90 days trading horizon CMS Energy is expected to generate 0.98 times more return on investment than DTE Energy. However, CMS Energy is 1.02 times less risky than DTE Energy. It trades about 0.02 of its potential returns per unit of risk. DTE Energy is currently generating about 0.01 per unit of risk. If you would invest 1,762 in CMS Energy on August 27, 2024 and sell it today you would earn a total of 185.00 from holding CMS Energy or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy vs. DTE Energy
Performance |
| Timeline |
| CMS Energy |
| DTE Energy |
CMS Energy and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and DTE Energy
The main advantage of trading using opposite CMS Energy and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, DTE 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 DTE Energy will offset losses from the drop in DTE Energy's long position.| CMS Energy vs. Entergy Texas | CMS Energy vs. Duke Energy | CMS Energy vs. Spire Inc | CMS Energy vs. Consumers Energy |
| DTE Energy vs. Consumers Energy | DTE Energy vs. CMS Energy | DTE Energy vs. Cadiz Depositary Shares | DTE Energy vs. DTE Energy |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |