Correlation Between CMS Energy and Eagle Point
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Eagle Point 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 Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy Corp and Eagle Point Credit, you can compare the effects of market volatilities on CMS Energy and Eagle Point 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 Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Eagle Point.
Diversification Opportunities for CMS Energy and Eagle Point
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between CMS and Eagle is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy Corp and Eagle Point Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Credit 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 Corp are associated (or correlated) with Eagle Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Point Credit has no effect on the direction of CMS Energy i.e., CMS Energy and Eagle Point go up and down completely randomly.
Pair Corralation between CMS Energy and Eagle Point
Given the investment horizon of 90 days CMS Energy Corp is expected to under-perform the Eagle Point. But the stock apears to be less risky and, when comparing its historical volatility, CMS Energy Corp is 1.41 times less risky than Eagle Point. The stock trades about -0.1 of its potential returns per unit of risk. The Eagle Point Credit is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,490 in Eagle Point Credit on December 10, 2024 and sell it today you would earn a total of 35.00 from holding Eagle Point Credit or generate 1.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CMS Energy Corp vs. Eagle Point Credit
Performance |
Timeline |
CMS Energy Corp |
Eagle Point Credit |
CMS Energy and Eagle Point Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CMS Energy and Eagle Point
The main advantage of trading using opposite CMS Energy and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Eagle Point 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 Eagle Point will offset losses from the drop in Eagle Point's long position.CMS Energy vs. CMS Energy Corp | CMS Energy vs. CMS Energy Corp | CMS Energy vs. Duke Energy Corp | CMS Energy vs. American Financial Group |
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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