Correlation Between NiSource and Entergy Arkansas
Can any of the company-specific risk be diversified away by investing in both NiSource and Entergy Arkansas 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 Entergy Arkansas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Entergy Arkansas LLC, you can compare the effects of market volatilities on NiSource and Entergy Arkansas 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 Entergy Arkansas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Entergy Arkansas.
Diversification Opportunities for NiSource and Entergy Arkansas
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NiSource and Entergy is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Entergy Arkansas LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy Arkansas LLC 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 Entergy Arkansas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy Arkansas LLC has no effect on the direction of NiSource i.e., NiSource and Entergy Arkansas go up and down completely randomly.
Pair Corralation between NiSource and Entergy Arkansas
Allowing for the 90-day total investment horizon NiSource is expected to generate 1.37 times more return on investment than Entergy Arkansas. However, NiSource is 1.37 times more volatile than Entergy Arkansas LLC. It trades about 0.27 of its potential returns per unit of risk. Entergy Arkansas LLC is currently generating about -0.02 per unit of risk. If you would invest 3,281 in NiSource on August 30, 2024 and sell it today you would earn a total of 544.00 from holding NiSource or generate 16.58% 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. Entergy Arkansas LLC
Performance |
| Timeline |
| NiSource |
| Entergy Arkansas LLC |
NiSource and Entergy Arkansas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Entergy Arkansas
The main advantage of trading using opposite NiSource and Entergy Arkansas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Entergy Arkansas 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 Entergy Arkansas will offset losses from the drop in Entergy Arkansas' long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| Entergy Arkansas vs. Entergy Mississippi LLC | Entergy Arkansas vs. Entergy New Orleans | Entergy Arkansas vs. Entergy Louisiana LLC | Entergy Arkansas vs. Southern Co |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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