Correlation Between NiSource and Suburban Propane
Can any of the company-specific risk be diversified away by investing in both NiSource and Suburban Propane 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 Suburban Propane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Suburban Propane Partners, you can compare the effects of market volatilities on NiSource and Suburban Propane 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 Suburban Propane. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Suburban Propane.
Diversification Opportunities for NiSource and Suburban Propane
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NiSource and Suburban is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners 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 Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of NiSource i.e., NiSource and Suburban Propane go up and down completely randomly.
Pair Corralation between NiSource and Suburban Propane
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.57 times more return on investment than Suburban Propane. However, NiSource is 1.77 times less risky than Suburban Propane. It trades about 0.27 of its potential returns per unit of risk. Suburban Propane Partners is currently generating about -0.01 per unit of risk. If you would invest 2,746 in NiSource on August 24, 2024 and sell it today you would earn a total of 1,039 from holding NiSource or generate 37.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. Suburban Propane Partners
Performance |
| Timeline |
| NiSource |
| Suburban Propane Partners |
NiSource and Suburban Propane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Suburban Propane
The main advantage of trading using opposite NiSource and Suburban Propane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Suburban Propane 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 Suburban Propane will offset losses from the drop in Suburban Propane's long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. NewJersey Resources | Suburban Propane vs. Atmos Energy | Suburban Propane vs. Chesapeake Utilities |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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