Correlation Between NiSource and National Vision
Can any of the company-specific risk be diversified away by investing in both NiSource and National Vision 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 National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and National Vision Holdings, you can compare the effects of market volatilities on NiSource and National Vision 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 National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and National Vision.
Diversification Opportunities for NiSource and National Vision
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NiSource and National is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of NiSource i.e., NiSource and National Vision go up and down completely randomly.
Pair Corralation between NiSource and National Vision
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.28 times more return on investment than National Vision. However, NiSource is 3.63 times less risky than National Vision. It trades about 0.27 of its potential returns per unit of risk. National Vision Holdings is currently generating about -0.04 per unit of risk. If you would invest 2,815 in NiSource on September 1, 2024 and sell it today you would earn a total of 994.00 from holding NiSource or generate 35.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. National Vision Holdings
Performance |
| Timeline |
| NiSource |
| National Vision Holdings |
NiSource and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and National Vision
The main advantage of trading using opposite NiSource and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision's long position.| NiSource vs. NorthWestern | NiSource vs. Avista | NiSource vs. Otter Tail | NiSource vs. Companhia Paranaense de |
| National Vision vs. Alcon AG | National Vision vs. The Cooper Companies, | National Vision vs. AngioDynamics | National Vision vs. AptarGroup |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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