Correlation Between Iridium Communications and NiSource
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and NiSource, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and NiSource.
Diversification Opportunities for Iridium Communications and NiSource
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Iridium and NiSource is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and NiSource go up and down completely randomly.
Pair Corralation between Iridium Communications and NiSource
Given the investment horizon of 90 days Iridium Communications is expected to under-perform the NiSource. In addition to that, Iridium Communications is 2.04 times more volatile than NiSource. It trades about -0.03 of its total potential returns per unit of risk. NiSource is currently generating about 0.07 per unit of volatility. If you would invest 2,589 in NiSource on August 27, 2024 and sell it today you would earn a total of 1,182 from holding NiSource or generate 45.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. NiSource
Performance |
| Timeline |
| Iridium Communications |
| NiSource |
Iridium Communications and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and NiSource
The main advantage of trading using opposite Iridium Communications and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.The idea behind Iridium Communications and NiSource 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.
| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |