Correlation Between NiSource and Atmos Energy
Can any of the company-specific risk be diversified away by investing in both NiSource and Atmos Energy 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 Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Atmos Energy, you can compare the effects of market volatilities on NiSource and Atmos Energy 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 Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Atmos Energy.
Diversification Opportunities for NiSource and Atmos Energy
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NiSource and Atmos is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy 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 Atmos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmos Energy has no effect on the direction of NiSource i.e., NiSource and Atmos Energy go up and down completely randomly.
Pair Corralation between NiSource and Atmos Energy
Allowing for the 90-day total investment horizon NiSource is expected to generate 1.24 times more return on investment than Atmos Energy. However, NiSource is 1.24 times more volatile than Atmos Energy. It trades about 0.32 of its potential returns per unit of risk. Atmos Energy is currently generating about 0.3 per unit of risk. If you would invest 3,487 in NiSource on August 27, 2024 and sell it today you would earn a total of 284.00 from holding NiSource or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. Atmos Energy
Performance |
| Timeline |
| NiSource |
| Atmos Energy |
NiSource and Atmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Atmos Energy
The main advantage of trading using opposite NiSource and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Atmos Energy 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 Atmos Energy will offset losses from the drop in Atmos Energy's long position.| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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