Correlation Between CMS Energy and Gabelli Utilities
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Gabelli Utilities 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 Gabelli Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Gabelli Utilities, you can compare the effects of market volatilities on CMS Energy and Gabelli Utilities 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 Gabelli Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Gabelli Utilities.
Diversification Opportunities for CMS Energy and Gabelli Utilities
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CMS and Gabelli is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Gabelli Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utilities 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 Gabelli Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utilities has no effect on the direction of CMS Energy i.e., CMS Energy and Gabelli Utilities go up and down completely randomly.
Pair Corralation between CMS Energy and Gabelli Utilities
Considering the 90-day investment horizon CMS Energy is expected to generate 2.96 times less return on investment than Gabelli Utilities. In addition to that, CMS Energy is 1.34 times more volatile than Gabelli Utilities. It trades about 0.04 of its total potential returns per unit of risk. Gabelli Utilities is currently generating about 0.18 per unit of volatility. If you would invest 598.00 in Gabelli Utilities on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Gabelli Utilities or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CMS Energy vs. Gabelli Utilities
Performance |
| Timeline |
| CMS Energy |
| Gabelli Utilities |
CMS Energy and Gabelli Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Gabelli Utilities
The main advantage of trading using opposite CMS Energy and Gabelli Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Gabelli Utilities 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 Gabelli Utilities will offset losses from the drop in Gabelli Utilities' long position.| CMS Energy vs. Entergy | CMS Energy vs. Ameren Corp | CMS Energy vs. CenterPoint Energy | CMS Energy vs. Alliant Energy Corp |
| Gabelli Utilities vs. Rationalpier 88 Convertible | Gabelli Utilities vs. Calamos Dynamic Convertible | Gabelli Utilities vs. Federated Ultrashort Bond | Gabelli Utilities vs. Ultra Short Fixed Income |
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.
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