Correlation Between Affiliated Managers and CMS Energy
Can any of the company-specific risk be diversified away by investing in both Affiliated Managers 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 Affiliated Managers and CMS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affiliated Managers Group, and CMS Energy Corp, you can compare the effects of market volatilities on Affiliated Managers 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 Affiliated Managers with a short position of CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and CMS Energy.
Diversification Opportunities for Affiliated Managers and CMS Energy
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Affiliated and CMS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group, and CMS Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy Corp and Affiliated Managers 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 Affiliated Managers Group, 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 Corp has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and CMS Energy go up and down completely randomly.
Pair Corralation between Affiliated Managers and CMS Energy
Given the investment horizon of 90 days Affiliated Managers Group, is expected to generate 2.0 times more return on investment than CMS Energy. However, Affiliated Managers is 2.0 times more volatile than CMS Energy Corp. It trades about 0.04 of its potential returns per unit of risk. CMS Energy Corp is currently generating about 0.06 per unit of risk. If you would invest 1,567 in Affiliated Managers Group, on September 2, 2024 and sell it today you would earn a total of 408.00 from holding Affiliated Managers Group, or generate 26.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affiliated Managers Group, vs. CMS Energy Corp
Performance |
| Timeline |
| Affiliated Managers |
| CMS Energy Corp |
Affiliated Managers and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Managers and CMS Energy
The main advantage of trading using opposite Affiliated Managers and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers 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.| Affiliated Managers vs. Affiliated Managers Group | Affiliated Managers vs. Southern Company Series | Affiliated Managers vs. DTE Energy | Affiliated Managers vs. United States Cellular |
| CMS Energy vs. CMS Energy Corp | CMS Energy vs. DTE Energy Co | CMS Energy vs. Duke Energy Corp | CMS Energy 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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