Correlation Between CMS Energy and Ameren Corp
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Ameren Corp 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 Ameren Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Ameren Corp, you can compare the effects of market volatilities on CMS Energy and Ameren Corp 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 Ameren Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Ameren Corp.
Diversification Opportunities for CMS Energy and Ameren Corp
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between CMS and Ameren is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp 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 Ameren Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Corp has no effect on the direction of CMS Energy i.e., CMS Energy and Ameren Corp go up and down completely randomly.
Pair Corralation between CMS Energy and Ameren Corp
Considering the 90-day investment horizon CMS Energy is expected to under-perform the Ameren Corp. But the stock apears to be less risky and, when comparing its historical volatility, CMS Energy is 1.11 times less risky than Ameren Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Ameren Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 8,899 in Ameren Corp on November 2, 2024 and sell it today you would earn a total of 512.00 from holding Ameren Corp or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy vs. Ameren Corp
Performance |
| Timeline |
| CMS Energy |
| Ameren Corp |
CMS Energy and Ameren Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Ameren Corp
The main advantage of trading using opposite CMS Energy and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Ameren Corp 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 Ameren Corp will offset losses from the drop in Ameren Corp's long position.| CMS Energy vs. Entergy | CMS Energy vs. Ameren Corp | CMS Energy vs. CenterPoint Energy | CMS Energy vs. Alliant Energy Corp |
| Ameren Corp vs. CMS Energy | Ameren Corp vs. Pinnacle West Capital | Ameren Corp vs. MGE Energy | Ameren Corp vs. Evergy, |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |