Correlation Between CMS Energy and Stifel Financial
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Stifel Financial 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 Stifel Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy Corp and Stifel Financial, you can compare the effects of market volatilities on CMS Energy and Stifel Financial 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 Stifel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Stifel Financial.
Diversification Opportunities for CMS Energy and Stifel Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CMS and Stifel is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy Corp and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial 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 Corp are associated (or correlated) with Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of CMS Energy i.e., CMS Energy and Stifel Financial go up and down completely randomly.
Pair Corralation between CMS Energy and Stifel Financial
Given the investment horizon of 90 days CMS Energy Corp is expected to generate 0.54 times more return on investment than Stifel Financial. However, CMS Energy Corp is 1.86 times less risky than Stifel Financial. It trades about -0.03 of its potential returns per unit of risk. Stifel Financial is currently generating about -0.05 per unit of risk. If you would invest 2,459 in CMS Energy Corp on August 31, 2024 and sell it today you would lose (7.00) from holding CMS Energy Corp or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy Corp vs. Stifel Financial
Performance |
| Timeline |
| CMS Energy Corp |
| Stifel Financial |
CMS Energy and Stifel Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Stifel Financial
The main advantage of trading using opposite CMS Energy and Stifel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Stifel Financial 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 Stifel Financial will offset losses from the drop in Stifel Financial's long position.| CMS Energy vs. Southern Company Series | CMS Energy vs. DTE Energy Co | CMS Energy vs. Affiliated Managers Group, | CMS Energy vs. United States Cellular |
| Stifel Financial vs. Reinsurance Group of | Stifel Financial vs. Southern Co | Stifel Financial vs. DTE Energy Co | Stifel Financial vs. Georgia Power Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |