Correlation Between NiSource and United Parks
Can any of the company-specific risk be diversified away by investing in both NiSource and United Parks 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 United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and United Parks Resorts, you can compare the effects of market volatilities on NiSource and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and United Parks.
Diversification Opportunities for NiSource and United Parks
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NiSource and United is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of NiSource i.e., NiSource and United Parks go up and down completely randomly.
Pair Corralation between NiSource and United Parks
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.52 times more return on investment than United Parks. However, NiSource is 1.91 times less risky than United Parks. It trades about 0.07 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.02 per unit of risk. If you would invest 2,611 in NiSource on August 31, 2024 and sell it today you would earn a total of 1,214 from holding NiSource or generate 46.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. United Parks Resorts
Performance |
| Timeline |
| NiSource |
| United Parks Resorts |
NiSource and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and United Parks
The main advantage of trading using opposite NiSource and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| United Parks vs. Amer Sports, | United Parks vs. Vista Outdoor | United Parks vs. Escalade Incorporated | United Parks vs. Funko Inc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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