Correlation Between CMS Energy and Portland General
Can any of the company-specific risk be diversified away by investing in both CMS Energy and Portland General 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 Portland General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and Portland General Electric, you can compare the effects of market volatilities on CMS Energy and Portland General 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 Portland General. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and Portland General.
Diversification Opportunities for CMS Energy and Portland General
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CMS and Portland is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Portland General Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portland General Electric 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 Portland General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portland General Electric has no effect on the direction of CMS Energy i.e., CMS Energy and Portland General go up and down completely randomly.
Pair Corralation between CMS Energy and Portland General
Considering the 90-day investment horizon CMS Energy is expected to generate 2.55 times less return on investment than Portland General. But when comparing it to its historical volatility, CMS Energy is 1.31 times less risky than Portland General. It trades about 0.03 of its potential returns per unit of risk. Portland General Electric is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,077 in Portland General Electric on June 12, 2025 and sell it today you would earn a total of 147.00 from holding Portland General Electric or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy vs. Portland General Electric
Performance |
| Timeline |
| CMS Energy |
| Portland General Electric |
CMS Energy and Portland General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and Portland General
The main advantage of trading using opposite CMS Energy and Portland General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, Portland General 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 Portland General will offset losses from the drop in Portland General's long position.| CMS Energy vs. DTE Energy | CMS Energy vs. Alliant Energy Corp | CMS Energy vs. Ameren Corp | CMS Energy vs. CenterPoint Energy |
| Portland General vs. IDACORP | Portland General vs. CMS Energy | Portland General vs. TXNM Energy, | Portland General 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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