Correlation Between CMS Energy and Terna Rete
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Terna Rete 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 Terna Rete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Terna Rete, you can compare the effects of market volatilities on CMS Energy and Terna Rete 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 Terna Rete. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Terna Rete.
Diversification Opportunities for CMS Energy and Terna Rete
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CMS and Terna is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Terna Rete in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terna Rete 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 Terna Rete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terna Rete has no effect on the direction of CMS Energy i.e., CMS Energy and Terna Rete go up and down completely randomly.
Pair Corralation between CMS Energy and Terna Rete
Assuming the 90 days horizon CMS Energy is expected to generate 1.29 times more return on investment than Terna Rete. However, CMS Energy is 1.29 times more volatile than Terna Rete. It trades about 0.04 of its potential returns per unit of risk. Terna Rete is currently generating about -0.03 per unit of risk. If you would invest 6,200 in CMS Energy on September 12, 2024 and sell it today you would earn a total of 200.00 from holding CMS Energy or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy vs. Terna Rete
Performance |
| Timeline |
| CMS Energy |
| Terna Rete |
CMS Energy and Terna Rete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Terna Rete
The main advantage of trading using opposite CMS Energy and Terna Rete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Terna Rete 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 Terna Rete will offset losses from the drop in Terna Rete's long position.| CMS Energy vs. INTERCONT HOTELS | CMS Energy vs. Dalata Hotel Group | CMS Energy vs. VITEC SOFTWARE GROUP | CMS Energy vs. Constellation Software |
| Terna Rete vs. MAGNUM MINING EXP | Terna Rete vs. CompuGroup Medical SE | Terna Rete vs. TOREX SEMICONDUCTOR LTD | Terna Rete vs. GRIFFIN MINING LTD |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |