Correlation Between NiSource and Sun Life
Can any of the company-specific risk be diversified away by investing in both NiSource and Sun Life 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 Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Sun Life Financial, you can compare the effects of market volatilities on NiSource and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Sun Life.
Diversification Opportunities for NiSource and Sun Life
Almost no diversification
The 3 months correlation between NiSource and Sun is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of NiSource i.e., NiSource and Sun Life go up and down completely randomly.
Pair Corralation between NiSource and Sun Life
Allowing for the 90-day total investment horizon NiSource is expected to generate 1.09 times more return on investment than Sun Life. However, NiSource is 1.09 times more volatile than Sun Life Financial. It trades about 0.12 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.09 per unit of risk. If you would invest 2,502 in NiSource on August 29, 2024 and sell it today you would earn a total of 1,323 from holding NiSource or generate 52.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. Sun Life Financial
Performance |
| Timeline |
| NiSource |
| Sun Life Financial |
NiSource and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Sun Life
The main advantage of trading using opposite NiSource and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.| NiSource vs. NewJersey Resources | NiSource vs. UGI Corporation | NiSource vs. Spire Inc | NiSource vs. Chesapeake Utilities |
| Sun Life vs. Axa Equitable Holdings | Sun Life vs. American International Group | Sun Life vs. Arch Capital Group | Sun Life vs. Old Republic International |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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