Correlation Between CMS Energy and Alliant Energy
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Alliant 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 Alliant 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 Alliant Energy Corp, you can compare the effects of market volatilities on CMS Energy and Alliant 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 Alliant Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Alliant Energy.
Diversification Opportunities for CMS Energy and Alliant Energy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CMS and Alliant is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Alliant Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliant Energy Corp 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 Alliant Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliant Energy Corp has no effect on the direction of CMS Energy i.e., CMS Energy and Alliant Energy go up and down completely randomly.
Pair Corralation between CMS Energy and Alliant Energy
Considering the 90-day investment horizon CMS Energy is expected to under-perform the Alliant Energy. But the stock apears to be less risky and, when comparing its historical volatility, CMS Energy is 1.11 times less risky than Alliant Energy. The stock trades about -0.08 of its potential returns per unit of risk. The Alliant Energy Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 6,306 in Alliant Energy Corp on March 28, 2025 and sell it today you would lose (297.00) from holding Alliant Energy Corp or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
CMS Energy vs. Alliant Energy Corp
Performance |
| Timeline |
| CMS Energy |
| Alliant Energy Corp |
CMS Energy and Alliant Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Alliant Energy
The main advantage of trading using opposite CMS Energy and Alliant Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Alliant 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 Alliant Energy will offset losses from the drop in Alliant Energy's long position.| CMS Energy vs. Entergy | CMS Energy vs. Ameren Corp | CMS Energy vs. CenterPoint Energy | CMS Energy vs. Alliant Energy Corp |
| Alliant Energy vs. DTE Energy | Alliant Energy vs. Ameren Corp | Alliant Energy vs. CenterPoint Energy | Alliant Energy vs. Pinnacle West Capital |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |