Correlation Between CMS Energy and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Centrais Electricas 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 Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on CMS Energy and Centrais Electricas 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 Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Centrais Electricas.
Diversification Opportunities for CMS Energy and Centrais Electricas
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CMS and Centrais is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas 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 Centrais Electricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Electricas has no effect on the direction of CMS Energy i.e., CMS Energy and Centrais Electricas go up and down completely randomly.
Pair Corralation between CMS Energy and Centrais Electricas
Considering the 90-day investment horizon CMS Energy is expected to generate 0.55 times more return on investment than Centrais Electricas. However, CMS Energy is 1.81 times less risky than Centrais Electricas. It trades about 0.03 of its potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about -0.01 per unit of risk. If you would invest 5,875 in CMS Energy on October 25, 2024 and sell it today you would earn a total of 711.00 from holding CMS Energy or generate 12.1% 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. Centrais Electricas Brasileira
Performance |
| Timeline |
| CMS Energy |
| Centrais Electricas |
CMS Energy and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Centrais Electricas
The main advantage of trading using opposite CMS Energy and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Centrais Electricas 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 Centrais Electricas will offset losses from the drop in Centrais Electricas' long position.| CMS Energy vs. Entergy | CMS Energy vs. Ameren Corp | CMS Energy vs. CenterPoint Energy | CMS Energy vs. Alliant Energy Corp |
| Centrais Electricas vs. Genie Energy | Centrais Electricas vs. Central Puerto SA | Centrais Electricas vs. Korea Electric Power | Centrais Electricas vs. Empresa Distribuidora y |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |