Correlation Between Companhia Paranaense and NiSource
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense and NiSource 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 Companhia Paranaense and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Paranaense de and NiSource, you can compare the effects of market volatilities on Companhia Paranaense and NiSource 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 Companhia Paranaense with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and NiSource.
Diversification Opportunities for Companhia Paranaense and NiSource
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Companhia and NiSource is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Companhia Paranaense 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 Companhia Paranaense de are associated (or correlated) with NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and NiSource go up and down completely randomly.
Pair Corralation between Companhia Paranaense and NiSource
Considering the 90-day investment horizon Companhia Paranaense de is expected to under-perform the NiSource. In addition to that, Companhia Paranaense is 1.76 times more volatile than NiSource. It trades about -0.03 of its total potential returns per unit of risk. NiSource is currently generating about 0.17 per unit of volatility. If you would invest 2,528 in NiSource on August 27, 2024 and sell it today you would earn a total of 1,243 from holding NiSource or generate 49.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Paranaense de vs. NiSource
Performance |
| Timeline |
| Companhia Paranaense |
| NiSource |
Companhia Paranaense and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and NiSource
The main advantage of trading using opposite Companhia Paranaense and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense position performs unexpectedly, NiSource 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 NiSource will offset losses from the drop in NiSource's long position.| Companhia Paranaense vs. Montauk Renewables | Companhia Paranaense vs. Energy of Minas | Companhia Paranaense vs. NorthWestern | Companhia Paranaense vs. Otter Tail |
| NiSource vs. NorthWestern | NiSource vs. Avista | NiSource vs. Otter Tail | NiSource vs. Companhia Paranaense de |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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