Correlation Between NiSource and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both NiSource and ArcelorMittal 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 ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and ArcelorMittal SA ADR, you can compare the effects of market volatilities on NiSource and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and ArcelorMittal.
Diversification Opportunities for NiSource and ArcelorMittal
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NiSource and ArcelorMittal is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of NiSource i.e., NiSource and ArcelorMittal go up and down completely randomly.
Pair Corralation between NiSource and ArcelorMittal
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.44 times more return on investment than ArcelorMittal. However, NiSource is 2.29 times less risky than ArcelorMittal. It trades about 0.26 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about 0.07 per unit of risk. If you would invest 3,256 in NiSource on August 25, 2024 and sell it today you would earn a total of 515.00 from holding NiSource or generate 15.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
NiSource vs. ArcelorMittal SA ADR
Performance |
Timeline |
NiSource |
ArcelorMittal SA ADR |
NiSource and ArcelorMittal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NiSource and ArcelorMittal
The main advantage of trading using opposite NiSource and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |