Correlation Between NiSource and Enagas SA

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Can any of the company-specific risk be diversified away by investing in both NiSource and Enagas SA 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 Enagas SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Enagas SA, you can compare the effects of market volatilities on NiSource and Enagas SA 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 Enagas SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Enagas SA.

Diversification Opportunities for NiSource and Enagas SA

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between NiSource and Enagas is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Enagas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enagas SA 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 Enagas SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enagas SA has no effect on the direction of NiSource i.e., NiSource and Enagas SA go up and down completely randomly.

Pair Corralation between NiSource and Enagas SA

Allowing for the 90-day total investment horizon NiSource is expected to generate 0.69 times more return on investment than Enagas SA. However, NiSource is 1.45 times less risky than Enagas SA. It trades about 0.17 of its potential returns per unit of risk. Enagas SA is currently generating about -0.03 per unit of risk. If you would invest  2,498  in NiSource on November 7, 2024 and sell it today you would earn a total of  1,232  from holding NiSource or generate 49.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.59%
ValuesDaily Returns

NiSource  vs.  Enagas SA

 Performance 
       Timeline  
NiSource 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, NiSource may actually be approaching a critical reversion point that can send shares even higher in March 2025.
Enagas SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Enagas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

NiSource and Enagas SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NiSource and Enagas SA

The main advantage of trading using opposite NiSource and Enagas SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Enagas SA 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 Enagas SA will offset losses from the drop in Enagas SA's long position.
The idea behind NiSource and Enagas SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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