Correlation Between NiSource and CF Industries
Can any of the company-specific risk be diversified away by investing in both NiSource and CF Industries 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 CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and CF Industries Holdings, you can compare the effects of market volatilities on NiSource and CF Industries 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 CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and CF Industries.
Diversification Opportunities for NiSource and CF Industries
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NiSource and CF Industries is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings 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 CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of NiSource i.e., NiSource and CF Industries go up and down completely randomly.
Pair Corralation between NiSource and CF Industries
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.63 times more return on investment than CF Industries. However, NiSource is 1.6 times less risky than CF Industries. It trades about 0.08 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.0 per unit of risk. If you would invest 2,547 in NiSource on August 30, 2024 and sell it today you would earn a total of 1,278 from holding NiSource or generate 50.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. CF Industries Holdings
Performance |
| Timeline |
| NiSource |
| CF Industries Holdings |
NiSource and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and CF Industries
The main advantage of trading using opposite NiSource and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.| NiSource vs. NewJersey Resources | NiSource vs. UGI Corporation | NiSource vs. Spire Inc | NiSource vs. Chesapeake Utilities |
| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. FMC Corporation |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |