Correlation Between CMS Energy and STRATSSM Certificates
Can any of the company-specific risk be diversified away by investing in both CMS Energy and STRATSSM Certificates 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 STRATSSM Certificates 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 STRATSSM Certificates series, you can compare the effects of market volatilities on CMS Energy and STRATSSM Certificates 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 STRATSSM Certificates. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and STRATSSM Certificates.
Diversification Opportunities for CMS Energy and STRATSSM Certificates
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between CMS and STRATSSM is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy Corp and STRATSSM Certificates series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATSSM Certificates 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 STRATSSM Certificates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATSSM Certificates has no effect on the direction of CMS Energy i.e., CMS Energy and STRATSSM Certificates go up and down completely randomly.
Pair Corralation between CMS Energy and STRATSSM Certificates
Given the investment horizon of 90 days CMS Energy Corp is expected to under-perform the STRATSSM Certificates. In addition to that, CMS Energy is 1.66 times more volatile than STRATSSM Certificates series. It trades about -0.05 of its total potential returns per unit of risk. STRATSSM Certificates series is currently generating about 0.14 per unit of volatility. If you would invest 2,285 in STRATSSM Certificates series on September 2, 2024 and sell it today you would earn a total of 20.00 from holding STRATSSM Certificates series or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy Corp vs. STRATSSM Certificates series
Performance |
| Timeline |
| CMS Energy Corp |
| STRATSSM Certificates |
CMS Energy and STRATSSM Certificates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and STRATSSM Certificates
The main advantage of trading using opposite CMS Energy and STRATSSM Certificates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, STRATSSM Certificates 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 STRATSSM Certificates will offset losses from the drop in STRATSSM Certificates' long position.| CMS Energy vs. CMS Energy Corp | CMS Energy vs. DTE Energy Co | CMS Energy vs. Duke Energy Corp | CMS Energy vs. Southern Co |
| STRATSSM Certificates vs. CMS Energy Corp | STRATSSM Certificates vs. Southern Co | STRATSSM Certificates vs. Duke Energy Corp | STRATSSM Certificates vs. Southern 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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