Correlation Between Li Auto and NiSource
Can any of the company-specific risk be diversified away by investing in both Li Auto 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 Li Auto and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Auto and NiSource, you can compare the effects of market volatilities on Li Auto 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 Li Auto with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and NiSource.
Diversification Opportunities for Li Auto and NiSource
Average diversification
The 3 months correlation between Li Auto and NiSource is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Li Auto 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 Li Auto 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 Li Auto i.e., Li Auto and NiSource go up and down completely randomly.
Pair Corralation between Li Auto and NiSource
Allowing for the 90-day total investment horizon Li Auto is expected to generate 3.24 times more return on investment than NiSource. However, Li Auto is 3.24 times more volatile than NiSource. It trades about 0.02 of its potential returns per unit of risk. NiSource is currently generating about 0.07 per unit of risk. If you would invest 2,034 in Li Auto on September 3, 2024 and sell it today you would earn a total of 246.00 from holding Li Auto or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Auto vs. NiSource
Performance |
| Timeline |
| Li Auto |
| NiSource |
Li Auto and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Auto and NiSource
The main advantage of trading using opposite Li Auto and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto 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.| Li Auto vs. GreenPower Motor | Li Auto vs. ZEEKR Intelligent Technology | Li Auto vs. Volcon Inc | Li Auto vs. Ford Motor |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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