Correlation Between BlackRock Capital and CMS Energy

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

By analyzing existing cross correlation between BlackRock Capital Allocation and CMS Energy Corp, you can compare the effects of market volatilities on BlackRock Capital and CMS 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 BlackRock Capital with a short position of CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Capital and CMS Energy.

Diversification Opportunities for BlackRock Capital and CMS Energy

0.8

Correlation Coefficient

BlackRock Capital  CMS Energy

Very poor diversification

The 3 months correlation between BlackRock and CMS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Capital Allocation and CMS Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy Corp and BlackRock Capital 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 BlackRock Capital Allocation are associated (or correlated) with CMS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMS Energy Corp has no effect on the direction of BlackRock Capital i.e., BlackRock Capital and CMS Energy go up and down completely randomly.

Pair Corralation between BlackRock Capital and CMS Energy

Given the investment horizon of 90 days BlackRock Capital Allocation is expected to generate 1.55 times more return on investment than CMS Energy. However, BlackRock Capital is 1.55 times more volatile than CMS Energy Corp. It trades about 0.17 of its potential returns per unit of risk. CMS Energy Corp is currently generating about 0.21 per unit of risk. If you would invest  1,388  in BlackRock Capital Allocation on May 6, 2025 and sell it today you would earn a total of  93.00  from holding BlackRock Capital Allocation or generate 6.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

BlackRock Capital Allocation  vs.  CMS Energy Corp

BlackRock Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Capital Allocation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BlackRock Capital may actually be approaching a critical reversion point that can send shares even higher in September 2025.

CMS Energy Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CMS Energy Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CMS Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BlackRock Capital and CMS Energy

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

The idea behind BlackRock Capital Allocation and CMS Energy Corp 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.

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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.