Correlation Between NiSource and Hennessy Gas
Can any of the company-specific risk be diversified away by investing in both NiSource and Hennessy Gas 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 Hennessy Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Hennessy Gas Utility, you can compare the effects of market volatilities on NiSource and Hennessy Gas 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 Hennessy Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Hennessy Gas.
Diversification Opportunities for NiSource and Hennessy Gas
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NiSource and Hennessy is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Hennessy Gas Utility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Gas Utility 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 Hennessy Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Gas Utility has no effect on the direction of NiSource i.e., NiSource and Hennessy Gas go up and down completely randomly.
Pair Corralation between NiSource and Hennessy Gas
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.67 times more return on investment than Hennessy Gas. However, NiSource is 1.49 times less risky than Hennessy Gas. It trades about 0.06 of its potential returns per unit of risk. Hennessy Gas Utility is currently generating about -0.23 per unit of risk. If you would invest 3,622 in NiSource on September 12, 2024 and sell it today you would earn a total of 39.00 from holding NiSource or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
NiSource vs. Hennessy Gas Utility
Performance |
| Timeline |
| NiSource |
| Hennessy Gas Utility |
NiSource and Hennessy Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Hennessy Gas
The main advantage of trading using opposite NiSource and Hennessy Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Hennessy Gas 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 Hennessy Gas will offset losses from the drop in Hennessy Gas' long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| Hennessy Gas vs. Utilities Fund Investor | Hennessy Gas vs. Amg Yacktman Focused | Hennessy Gas vs. Chemicals Portfolio Chemicals | Hennessy Gas vs. Invesco Energy Fund |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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