Correlation Between CMS Energy and Duke Energy
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Duke 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 Duke 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 Duke Energy, you can compare the effects of market volatilities on CMS Energy and Duke 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 Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Duke Energy.
Diversification Opportunities for CMS Energy and Duke Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CMS and Duke is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke 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 Duke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duke Energy has no effect on the direction of CMS Energy i.e., CMS Energy and Duke Energy go up and down completely randomly.
Pair Corralation between CMS Energy and Duke Energy
Considering the 90-day investment horizon CMS Energy is expected to under-perform the Duke Energy. In addition to that, CMS Energy is 1.07 times more volatile than Duke Energy. It trades about -0.07 of its total potential returns per unit of risk. Duke Energy is currently generating about 0.03 per unit of volatility. If you would invest 10,831 in Duke Energy on October 26, 2024 and sell it today you would earn a total of 51.00 from holding Duke Energy or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy vs. Duke Energy
Performance |
| Timeline |
| CMS Energy |
| Duke Energy |
CMS Energy and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Duke Energy
The main advantage of trading using opposite CMS Energy and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Duke 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 Duke Energy will offset losses from the drop in Duke Energy's long position.| CMS Energy vs. Entergy | CMS Energy vs. Ameren Corp | CMS Energy vs. CenterPoint Energy | CMS Energy vs. Alliant Energy Corp |
| Duke Energy vs. Consolidated Edison | Duke Energy vs. Dominion Energy | Duke Energy vs. American Electric Power | Duke Energy vs. Nextera 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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