Correlation Between CMS Energy and Gold Road
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Gold Road 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 Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Gold Road Resources, you can compare the effects of market volatilities on CMS Energy and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Gold Road.
Diversification Opportunities for CMS Energy and Gold Road
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CMS and Gold is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of CMS Energy i.e., CMS Energy and Gold Road go up and down completely randomly.
Pair Corralation between CMS Energy and Gold Road
Assuming the 90 days horizon CMS Energy is expected to generate 11.85 times less return on investment than Gold Road. But when comparing it to its historical volatility, CMS Energy is 2.95 times less risky than Gold Road. It trades about 0.08 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 106.00 in Gold Road Resources on September 14, 2024 and sell it today you would earn a total of 22.00 from holding Gold Road Resources or generate 20.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy vs. Gold Road Resources
Performance |
| Timeline |
| CMS Energy |
| Gold Road Resources |
CMS Energy and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Gold Road
The main advantage of trading using opposite CMS Energy and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| CMS Energy vs. Gold Road Resources | CMS Energy vs. GOLD ROAD RES | CMS Energy vs. INTERSHOP Communications Aktiengesellschaft | CMS Energy vs. TRAINLINE PLC LS |
| Gold Road vs. Franco Nevada | Gold Road vs. Superior Plus Corp | Gold Road vs. SIVERS SEMICONDUCTORS AB | Gold Road vs. Norsk Hydro ASA |
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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