Correlation Between CMS Energy and Contextlogic

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

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

Diversification Opportunities for CMS Energy and Contextlogic

0.39

Correlation Coefficient

CMS Energy  Contextlogic

Weak diversification

The 3 months correlation between CMS and Contextlogic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and Contextlogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contextlogic 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 Contextlogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contextlogic has no effect on the direction of CMS Energy i.e., CMS Energy and Contextlogic go up and down completely randomly.

Pair Corralation between CMS Energy and Contextlogic

Assuming the 90 days trading horizon CMS Energy is expected to generate 1.97 times less return on investment than Contextlogic. But when comparing it to its historical volatility, CMS Energy is 5.77 times less risky than Contextlogic. It trades about 0.13 of its potential returns per unit of risk. Contextlogic is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  714.00  in Contextlogic on April 29, 2025 and sell it today you would earn a total of  25.00  from holding Contextlogic or generate 3.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	61.29%
Values	Daily Returns

CMS Energy  vs.  Contextlogic

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 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.

Contextlogic

Risk-Adjusted Performance

Insignificant

Over the last 90 days Contextlogic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather conflicting technical and fundamental indicators, Contextlogic may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CMS Energy and Contextlogic

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

The idea behind CMS Energy and Contextlogic 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.