Correlation Between CMS Energy and Duke Energy
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Duke Energy 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 Duke Energy 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 Duke Energy Corp, you can compare the effects of market volatilities on CMS Energy and Duke Energy 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 Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Duke Energy.
Diversification Opportunities for CMS Energy and Duke Energy
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CMS and Duke is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy Corp and Duke Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy 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 Duke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duke Energy Corp has no effect on the direction of CMS Energy i.e., CMS Energy and Duke Energy go up and down completely randomly.
Pair Corralation between CMS Energy and Duke Energy
Given the investment horizon of 90 days CMS Energy Corp is expected to generate 1.13 times more return on investment than Duke Energy. However, CMS Energy is 1.13 times more volatile than Duke Energy Corp. It trades about 0.02 of its potential returns per unit of risk. Duke Energy Corp is currently generating about -0.11 per unit of risk. If you would invest 2,439 in CMS Energy Corp on August 24, 2024 and sell it today you would earn a total of 6.00 from holding CMS Energy Corp or generate 0.25% 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. Duke Energy Corp
Performance |
| Timeline |
| CMS Energy Corp |
| Duke Energy Corp |
CMS Energy and Duke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Duke Energy
The main advantage of trading using opposite CMS Energy and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Duke Energy 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 Duke Energy will offset losses from the drop in Duke Energy'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 |
| Duke Energy vs. Southern Co | Duke Energy vs. DTE Energy Co | Duke Energy vs. CMS Energy Corp | Duke Energy vs. CMS Energy Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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