Correlation Between CMS Energy and PNM Old

Can any of the company-specific risk be diversified away by investing in both CMS Energy and PNM Old 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 PNM Old into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CMS Energy and PNM Old, you can compare the effects of market volatilities on CMS Energy and PNM Old 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 PNM Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and PNM Old.

Diversification Opportunities for CMS Energy and PNM Old

0.0

Correlation Coefficient

CMS Energy  PNM Old

Pay attention - limited upside

The 3 months correlation between CMS and PNM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and PNM Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNM Old 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 PNM Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNM Old has no effect on the direction of CMS Energy i.e., CMS Energy and PNM Old go up and down completely randomly.

Pair Corralation between CMS Energy and PNM Old

If you would invest  6,643  in CMS Energy on December 26, 2024 and sell it today you would earn a total of  561.00  from holding CMS Energy or generate 8.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CMS Energy  vs.  PNM Old

CMS Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CMS Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, CMS Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PNM Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days PNM Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, PNM Old is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CMS Energy and PNM Old

The main advantage of trading using opposite CMS Energy and PNM Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, PNM Old 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 PNM Old will offset losses from the drop in PNM Old's long position.

The idea behind CMS Energy and PNM Old pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..