Correlation Between Narragansett Electric and CMS Energy
Can any of the company-specific risk be diversified away by investing in both Narragansett Electric 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 Narragansett Electric and CMS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Narragansett Electric and CMS Energy, you can compare the effects of market volatilities on Narragansett Electric 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 Narragansett Electric with a short position of CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Narragansett Electric and CMS Energy.
Diversification Opportunities for Narragansett Electric and CMS Energy
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Narragansett and CMS is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Narragansett Electric and CMS Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy and Narragansett Electric 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 The Narragansett Electric 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 Narragansett Electric i.e., Narragansett Electric and CMS Energy go up and down completely randomly.
Pair Corralation between Narragansett Electric and CMS Energy
If you would invest 5,500 in The Narragansett Electric on October 11, 2024 and sell it today you would earn a total of 0.00 from holding The Narragansett Electric or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
The Narragansett Electric vs. CMS Energy
Performance |
| Timeline |
| The Narragansett Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CMS Energy |
Narragansett Electric and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Narragansett Electric and CMS Energy
The main advantage of trading using opposite Narragansett Electric and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Narragansett Electric 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.| Narragansett Electric vs. Foot Locker | Narragansett Electric vs. Funko Inc | Narragansett Electric vs. G III Apparel Group | Narragansett Electric vs. Grounded People Apparel |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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