Correlation Between NiSource and National Fuel
Can any of the company-specific risk be diversified away by investing in both NiSource and National Fuel 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 Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and National Fuel Gas, you can compare the effects of market volatilities on NiSource and National Fuel 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 Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and National Fuel.
Diversification Opportunities for NiSource and National Fuel
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NiSource and National is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and National Fuel Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Fuel Gas 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 Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Fuel Gas has no effect on the direction of NiSource i.e., NiSource and National Fuel go up and down completely randomly.
Pair Corralation between NiSource and National Fuel
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.86 times more return on investment than National Fuel. However, NiSource is 1.16 times less risky than National Fuel. It trades about 0.08 of its potential returns per unit of risk. National Fuel Gas is currently generating about 0.02 per unit of risk. If you would invest 2,547 in NiSource on August 30, 2024 and sell it today you would earn a total of 1,278 from holding NiSource or generate 50.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NiSource vs. National Fuel Gas
Performance |
| Timeline |
| NiSource |
| National Fuel Gas |
NiSource and National Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and National Fuel
The main advantage of trading using opposite NiSource and National Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, National Fuel 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 Fuel will offset losses from the drop in National Fuel's long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| National Fuel vs. YPF Sociedad Anonima | National Fuel vs. Eni SpA ADR | National Fuel vs. Ecopetrol SA ADR | National Fuel vs. TotalEnergies SE ADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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