Correlation Between Fortis and CMS Energy

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

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

Diversification Opportunities for Fortis and CMS Energy

-0.31

Correlation Coefficient

Fortis  CMS Energy

Very good diversification

The 3 months correlation between Fortis and CMS is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Inc 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 Fortis 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 Fortis Inc 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 Fortis i.e., Fortis and CMS Energy go up and down completely randomly.

Pair Corralation between Fortis and CMS Energy

Considering the 90-day investment horizon Fortis Inc is expected to generate 1.69 times more return on investment than CMS Energy. However, Fortis is 1.69 times more volatile than CMS Energy Corp. It trades about 0.1 of its potential returns per unit of risk. CMS Energy Corp is currently generating about 0.02 per unit of risk. If you would invest  4,049  in Fortis Inc on September 11, 2025 and sell it today you would earn a total of  960.00  from holding Fortis Inc or generate 23.71% return on investment over 90 days.

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

Fortis Inc  vs.  CMS Energy Corp

Fortis Inc

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fortis is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CMS Energy Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days CMS Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CMS Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fortis and CMS Energy

The main advantage of trading using opposite Fortis and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortis 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 Fortis Inc 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.