Correlation Between CMS Energy and Via Renewables
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Via Renewables 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 Via Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Via Renewables, you can compare the effects of market volatilities on CMS Energy and Via Renewables 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 Via Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Via Renewables.
Diversification Opportunities for CMS Energy and Via Renewables
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CMS and Via is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables 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 Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of CMS Energy i.e., CMS Energy and Via Renewables go up and down completely randomly.
Pair Corralation between CMS Energy and Via Renewables
Assuming the 90 days trading horizon CMS Energy is expected to generate 1.99 times less return on investment than Via Renewables. But when comparing it to its historical volatility, CMS Energy is 2.33 times less risky than Via Renewables. It trades about 0.04 of its potential returns per unit of risk. Via Renewables is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,778 in Via Renewables on September 6, 2024 and sell it today you would earn a total of 438.00 from holding Via Renewables or generate 24.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CMS Energy vs. Via Renewables
Performance |
Timeline |
CMS Energy |
Via Renewables |
CMS Energy and Via Renewables Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CMS Energy and Via Renewables
The main advantage of trading using opposite CMS Energy and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Via Renewables 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 Via Renewables will offset losses from the drop in Via Renewables' long position.CMS Energy vs. Entergy Texas | CMS Energy vs. Duke Energy | CMS Energy vs. Spire Inc | CMS Energy vs. Consumers Energy |
Via Renewables vs. CMS Energy | Via Renewables vs. ACRES Commercial Realty | Via Renewables vs. Atlanticus Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Money Managers Screen money managers from public funds and ETFs managed around the world |