Correlation Between NiSource and Analog Devices
Can any of the company-specific risk be diversified away by investing in both NiSource and Analog Devices 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 NiSource and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Analog Devices, you can compare the effects of market volatilities on NiSource and Analog Devices 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 NiSource with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Analog Devices.
Diversification Opportunities for NiSource and Analog Devices
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NiSource and Analog is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and NiSource 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 NiSource are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of NiSource i.e., NiSource and Analog Devices go up and down completely randomly.
Pair Corralation between NiSource and Analog Devices
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.51 times more return on investment than Analog Devices. However, NiSource is 1.95 times less risky than Analog Devices. It trades about 0.38 of its potential returns per unit of risk. Analog Devices is currently generating about -0.05 per unit of risk. If you would invest 3,516 in NiSource on September 1, 2024 and sell it today you would earn a total of 293.00 from holding NiSource or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. Analog Devices
Performance |
| Timeline |
| NiSource |
| Analog Devices |
NiSource and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Analog Devices
The main advantage of trading using opposite NiSource and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| NiSource vs. NorthWestern | NiSource vs. Avista | NiSource vs. Otter Tail | NiSource vs. Companhia Paranaense de |
| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. GSI Technology | Analog Devices vs. MaxLinear | Analog Devices vs. Texas Instruments Incorporated |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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