Correlation Between NiSource and NioCorp Developments
Can any of the company-specific risk be diversified away by investing in both NiSource and NioCorp Developments 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 NioCorp Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and NioCorp Developments Ltd, you can compare the effects of market volatilities on NiSource and NioCorp Developments 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 NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and NioCorp Developments.
Diversification Opportunities for NiSource and NioCorp Developments
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between NiSource and NioCorp is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments 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 NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of NiSource i.e., NiSource and NioCorp Developments go up and down completely randomly.
Pair Corralation between NiSource and NioCorp Developments
Allowing for the 90-day total investment horizon NiSource is expected to generate 5.95 times less return on investment than NioCorp Developments. But when comparing it to its historical volatility, NiSource is 19.32 times less risky than NioCorp Developments. It trades about 0.27 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10.00 in NioCorp Developments Ltd on August 31, 2024 and sell it today you would lose (0.50) from holding NioCorp Developments Ltd or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.65% |
| Values | Daily Returns |
NiSource vs. NioCorp Developments Ltd
Performance |
| Timeline |
| NiSource |
| NioCorp Developments |
NiSource and NioCorp Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and NioCorp Developments
The main advantage of trading using opposite NiSource and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| NioCorp Developments vs. Aris Water Solutions | NioCorp Developments vs. VirnetX Holding Corp | NioCorp Developments vs. Qualys Inc | NioCorp Developments vs. Kinetik 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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