Correlation Between CMS Energy and Brunswick Corp
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Brunswick Corp 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 Brunswick Corp 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 Brunswick Corp, you can compare the effects of market volatilities on CMS Energy and Brunswick Corp 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 Brunswick Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Brunswick Corp.
Diversification Opportunities for CMS Energy and Brunswick Corp
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CMS and Brunswick is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy Corp and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp 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 Brunswick Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Corp has no effect on the direction of CMS Energy i.e., CMS Energy and Brunswick Corp go up and down completely randomly.
Pair Corralation between CMS Energy and Brunswick Corp
Given the investment horizon of 90 days CMS Energy Corp is expected to generate 0.84 times more return on investment than Brunswick Corp. However, CMS Energy Corp is 1.19 times less risky than Brunswick Corp. It trades about 0.03 of its potential returns per unit of risk. Brunswick Corp is currently generating about -0.06 per unit of risk. If you would invest 2,451 in CMS Energy Corp on August 28, 2024 and sell it today you would earn a total of 7.00 from holding CMS Energy Corp or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy Corp vs. Brunswick Corp
Performance |
| Timeline |
| CMS Energy Corp |
| Brunswick Corp |
CMS Energy and Brunswick Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Brunswick Corp
The main advantage of trading using opposite CMS Energy and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Brunswick Corp 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 Brunswick Corp will offset losses from the drop in Brunswick Corp's long position.| CMS Energy vs. CMS Energy Corp | CMS Energy vs. CMS Energy Corp | CMS Energy vs. Duke Energy Corp | CMS Energy vs. American Financial Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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