Correlation Between Innergex Renewable and CMS Energy
Can any of the company-specific risk be diversified away by investing in both Innergex Renewable 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 Innergex Renewable and CMS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innergex Renewable Energy and CMS Energy, you can compare the effects of market volatilities on Innergex Renewable 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 Innergex Renewable with a short position of CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innergex Renewable and CMS Energy.
Diversification Opportunities for Innergex Renewable and CMS Energy
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innergex and CMS is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and CMS Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy and Innergex Renewable 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 Innergex Renewable Energy 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 Innergex Renewable i.e., Innergex Renewable and CMS Energy go up and down completely randomly.
Pair Corralation between Innergex Renewable and CMS Energy
Assuming the 90 days horizon Innergex Renewable Energy is expected to generate 17.92 times more return on investment than CMS Energy. However, Innergex Renewable is 17.92 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 0.75 per unit of risk. If you would invest 516.00 in Innergex Renewable Energy on November 29, 2024 and sell it today you would earn a total of 424.00 from holding Innergex Renewable Energy or generate 82.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Innergex Renewable Energy vs. CMS Energy
Performance |
| Timeline |
| Innergex Renewable Energy |
| CMS Energy |
Innergex Renewable and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innergex Renewable and CMS Energy
The main advantage of trading using opposite Innergex Renewable and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innergex Renewable 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.| Innergex Renewable vs. Orsted AS | Innergex Renewable vs. Clearway Energy | Innergex Renewable vs. Fusion Fuel Green | Innergex Renewable vs. Powertap Hydrogen Capital |
| CMS Energy vs. Entergy | CMS Energy vs. Ameren Corp | CMS Energy vs. CenterPoint Energy | CMS Energy vs. Alliant 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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