Correlation Between NiSource and Spire
Can any of the company-specific risk be diversified away by investing in both NiSource and Spire 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 Spire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Spire Inc, you can compare the effects of market volatilities on NiSource and Spire 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 Spire. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Spire.
Diversification Opportunities for NiSource and Spire
Very weak diversification
The 3 months correlation between NiSource and Spire is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Spire Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Inc 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 Spire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Inc has no effect on the direction of NiSource i.e., NiSource and Spire go up and down completely randomly.
Pair Corralation between NiSource and Spire
Allowing for the 90-day total investment horizon NiSource is expected to generate 2.18 times more return on investment than Spire. However, NiSource is 2.18 times more volatile than Spire Inc. It trades about 0.32 of its potential returns per unit of risk. Spire Inc is currently generating about 0.0 per unit of risk. If you would invest 3,487 in NiSource on August 27, 2024 and sell it today you would earn a total of 284.00 from holding NiSource or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. Spire Inc
Performance |
| Timeline |
| NiSource |
| Spire Inc |
NiSource and Spire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Spire
The main advantage of trading using opposite NiSource and Spire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Spire 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 Spire will offset losses from the drop in Spire's long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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