Correlation Between LENZ Therapeutics and NiSource
Can any of the company-specific risk be diversified away by investing in both LENZ Therapeutics 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 LENZ Therapeutics and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LENZ Therapeutics and NiSource, you can compare the effects of market volatilities on LENZ Therapeutics 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 LENZ Therapeutics with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of LENZ Therapeutics and NiSource.
Diversification Opportunities for LENZ Therapeutics and NiSource
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LENZ and NiSource is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding LENZ Therapeutics and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and LENZ Therapeutics 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 LENZ Therapeutics 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 LENZ Therapeutics i.e., LENZ Therapeutics and NiSource go up and down completely randomly.
Pair Corralation between LENZ Therapeutics and NiSource
Given the investment horizon of 90 days LENZ Therapeutics is expected to generate 5.12 times more return on investment than NiSource. However, LENZ Therapeutics is 5.12 times more volatile than NiSource. It trades about 0.19 of its potential returns per unit of risk. NiSource is currently generating about 0.27 per unit of risk. If you would invest 2,272 in LENZ Therapeutics on August 31, 2024 and sell it today you would earn a total of 1,458 from holding LENZ Therapeutics or generate 64.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LENZ Therapeutics vs. NiSource
Performance |
| Timeline |
| LENZ Therapeutics |
| NiSource |
LENZ Therapeutics and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LENZ Therapeutics and NiSource
The main advantage of trading using opposite LENZ Therapeutics and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LENZ Therapeutics 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.| LENZ Therapeutics vs. Paysafe | LENZ Therapeutics vs. RBC Bearings Incorporated | LENZ Therapeutics vs. Arrow Electronics | LENZ Therapeutics vs. Marti Technologies |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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