Correlation Between CMS Energy and Excelerate Energy
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Excelerate 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 CMS Energy and Excelerate Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Excelerate Energy, you can compare the effects of market volatilities on CMS Energy and Excelerate 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 CMS Energy with a short position of Excelerate Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Excelerate Energy.
Diversification Opportunities for CMS Energy and Excelerate Energy
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CMS and Excelerate is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Excelerate Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelerate Energy 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 Excelerate Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelerate Energy has no effect on the direction of CMS Energy i.e., CMS Energy and Excelerate Energy go up and down completely randomly.
Pair Corralation between CMS Energy and Excelerate Energy
Considering the 90-day investment horizon CMS Energy is expected to generate 0.44 times more return on investment than Excelerate Energy. However, CMS Energy is 2.3 times less risky than Excelerate Energy. It trades about -0.01 of its potential returns per unit of risk. Excelerate Energy is currently generating about -0.02 per unit of risk. If you would invest 6,777 in CMS Energy on December 30, 2023 and sell it today you would lose (743.00) from holding CMS Energy or give up 10.96% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
CMS Energy vs. Excelerate Energy
Performance |
Timeline |
CMS Energy |
Excelerate Energy |
CMS Energy and Excelerate Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CMS Energy and Excelerate Energy
The main advantage of trading using opposite CMS Energy and Excelerate Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Excelerate 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 Excelerate Energy will offset losses from the drop in Excelerate Energy's long position.CMS Energy vs. Dream Finders HomesInc | CMS Energy vs. Contango ORE | CMS Energy vs. Skyline | CMS Energy vs. East Africa Metals |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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