Correlation Between NiSource and Li Auto
Can any of the company-specific risk be diversified away by investing in both NiSource and Li Auto 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 Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Li Auto, you can compare the effects of market volatilities on NiSource and Li Auto 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 Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Li Auto.
Diversification Opportunities for NiSource and Li Auto
Average diversification
The 3 months correlation between NiSource and Li Auto is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto 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 Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of NiSource i.e., NiSource and Li Auto go up and down completely randomly.
Pair Corralation between NiSource and Li Auto
Allowing for the 90-day total investment horizon NiSource is expected to generate 1.18 times less return on investment than Li Auto. But when comparing it to its historical volatility, NiSource is 3.24 times less risky than Li Auto. It trades about 0.07 of its potential returns per unit of risk. Li Auto is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,034 in Li Auto on September 3, 2024 and sell it today you would earn a total of 246.00 from holding Li Auto or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. Li Auto
Performance |
| Timeline |
| NiSource |
| Li Auto |
NiSource and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Li Auto
The main advantage of trading using opposite NiSource and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Li Auto 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 Li Auto will offset losses from the drop in Li Auto's long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| Li Auto vs. GreenPower Motor | Li Auto vs. ZEEKR Intelligent Technology | Li Auto vs. Volcon Inc | Li Auto vs. Ford Motor |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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