Correlation Between CMS Energy and Entergy Mississippi
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Entergy Mississippi 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 Entergy Mississippi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Entergy Mississippi LLC, you can compare the effects of market volatilities on CMS Energy and Entergy Mississippi 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 Entergy Mississippi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Entergy Mississippi.
Diversification Opportunities for CMS Energy and Entergy Mississippi
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CMS and Entergy is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Entergy Mississippi LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy Mississippi LLC 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 Entergy Mississippi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy Mississippi LLC has no effect on the direction of CMS Energy i.e., CMS Energy and Entergy Mississippi go up and down completely randomly.
Pair Corralation between CMS Energy and Entergy Mississippi
Assuming the 90 days trading horizon CMS Energy is expected to generate 1.5 times more return on investment than Entergy Mississippi. However, CMS Energy is 1.5 times more volatile than Entergy Mississippi LLC. It trades about 0.02 of its potential returns per unit of risk. Entergy Mississippi LLC is currently generating about 0.02 per unit of risk. If you would invest 1,854 in CMS Energy on August 31, 2024 and sell it today you would earn a total of 105.00 from holding CMS Energy or generate 5.66% 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. Entergy Mississippi LLC
Performance |
| Timeline |
| CMS Energy |
| Entergy Mississippi LLC |
CMS Energy and Entergy Mississippi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Entergy Mississippi
The main advantage of trading using opposite CMS Energy and Entergy Mississippi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Entergy Mississippi 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 Entergy Mississippi will offset losses from the drop in Entergy Mississippi's long position.| CMS Energy vs. Entergy Texas | CMS Energy vs. Duke Energy | CMS Energy vs. Spire Inc | CMS Energy vs. Consumers Energy |
| Entergy Mississippi vs. Entergy Arkansas LLC | Entergy Mississippi vs. Entergy New Orleans | Entergy Mississippi vs. Entergy Louisiana LLC | Entergy Mississippi vs. Entergy New Orleans |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |