Correlation Between NiSource and Southern Company
Can any of the company-specific risk be diversified away by investing in both NiSource and Southern Company 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 Southern Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Southern Company Series, you can compare the effects of market volatilities on NiSource and Southern Company 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 Southern Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Southern Company.
Diversification Opportunities for NiSource and Southern Company
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NiSource and Southern is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Southern Company Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Company 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 Southern Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Company has no effect on the direction of NiSource i.e., NiSource and Southern Company go up and down completely randomly.
Pair Corralation between NiSource and Southern Company
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.96 times more return on investment than Southern Company. However, NiSource is 1.04 times less risky than Southern Company. It trades about 0.44 of its potential returns per unit of risk. Southern Company Series is currently generating about -0.23 per unit of risk. If you would invest 3,487 in NiSource on August 31, 2024 and sell it today you would earn a total of 338.00 from holding NiSource or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. Southern Company Series
Performance |
| Timeline |
| NiSource |
| Southern Company |
NiSource and Southern Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Southern Company
The main advantage of trading using opposite NiSource and Southern Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Southern Company 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 Southern Company will offset losses from the drop in Southern Company's long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| Southern Company vs. Southern Co | Southern Company vs. DTE Energy | Southern Company vs. Southern Co | Southern Company vs. Prudential Financial 4125 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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