Correlation Between CMS Energy and Public Service
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Public Service 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 Public Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Public Service, you can compare the effects of market volatilities on CMS Energy and Public Service 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 Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Public Service.
Diversification Opportunities for CMS Energy and Public Service
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CMS and Public is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Public Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service 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 Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service has no effect on the direction of CMS Energy i.e., CMS Energy and Public Service go up and down completely randomly.
Pair Corralation between CMS Energy and Public Service
Considering the 90-day investment horizon CMS Energy is expected to generate 0.84 times more return on investment than Public Service. However, CMS Energy is 1.19 times less risky than Public Service. It trades about -0.12 of its potential returns per unit of risk. Public Service is currently generating about -0.23 per unit of risk. If you would invest 6,766 in CMS Energy on October 11, 2024 and sell it today you would lose (136.00) from holding CMS Energy or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CMS Energy vs. Public Service
Performance |
| Timeline |
| CMS Energy |
| Public Service |
CMS Energy and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Public Service
The main advantage of trading using opposite CMS Energy and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service's long position.| CMS Energy vs. Entergy | CMS Energy vs. Ameren Corp | CMS Energy vs. CenterPoint Energy | CMS Energy vs. Alliant Energy Corp |
| Public Service vs. WK Kellogg Co | Public Service vs. Copperbank Resources Corp | Public Service vs. Astral Foods Limited | Public Service vs. Ingredion Incorporated |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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