Correlation Between ENDESA ADR/ and CMS Energy
Can any of the company-specific risk be diversified away by investing in both ENDESA ADR/ and CMS 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 ENDESA ADR/ and CMS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENDESA ADR 12 and CMS Energy, you can compare the effects of market volatilities on ENDESA ADR/ and CMS 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 ENDESA ADR/ with a short position of CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENDESA ADR/ and CMS Energy.
Diversification Opportunities for ENDESA ADR/ and CMS Energy
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ENDESA and CMS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ENDESA ADR 12 and CMS Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy and ENDESA ADR/ 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 ENDESA ADR 12 are associated (or correlated) with CMS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMS Energy has no effect on the direction of ENDESA ADR/ i.e., ENDESA ADR/ and CMS Energy go up and down completely randomly.
Pair Corralation between ENDESA ADR/ and CMS Energy
Assuming the 90 days trading horizon ENDESA ADR 12 is expected to generate 1.17 times more return on investment than CMS Energy. However, ENDESA ADR/ is 1.17 times more volatile than CMS Energy. It trades about 0.28 of its potential returns per unit of risk. CMS Energy is currently generating about 0.21 per unit of risk. If you would invest 940.00 in ENDESA ADR 12 on October 21, 2024 and sell it today you would earn a total of 70.00 from holding ENDESA ADR 12 or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENDESA ADR 12 vs. CMS Energy
Performance |
| Timeline |
| ENDESA ADR 12 |
| CMS Energy |
ENDESA ADR/ and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENDESA ADR/ and CMS Energy
The main advantage of trading using opposite ENDESA ADR/ and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENDESA ADR/ position performs unexpectedly, CMS 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 CMS Energy will offset losses from the drop in CMS Energy's long position.| ENDESA ADR/ vs. ecotel communication ag | ENDESA ADR/ vs. CITY OFFICE REIT | ENDESA ADR/ vs. Infrastrutture Wireless Italiane | ENDESA ADR/ vs. Charter Communications |
| CMS Energy vs. Duke Energy | CMS Energy vs. WEC Energy Group | CMS Energy vs. ENDESA ADR 12 | CMS Energy vs. Terna Rete |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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