Correlation Between NiSource and Constellation Brands
Can any of the company-specific risk be diversified away by investing in both NiSource and Constellation Brands 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 Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Constellation Brands Class, you can compare the effects of market volatilities on NiSource and Constellation Brands 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 Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Constellation Brands.
Diversification Opportunities for NiSource and Constellation Brands
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NiSource and Constellation is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands 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 Constellation Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Brands has no effect on the direction of NiSource i.e., NiSource and Constellation Brands go up and down completely randomly.
Pair Corralation between NiSource and Constellation Brands
Allowing for the 90-day total investment horizon NiSource is expected to generate 0.8 times more return on investment than Constellation Brands. However, NiSource is 1.25 times less risky than Constellation Brands. It trades about 0.17 of its potential returns per unit of risk. Constellation Brands Class is currently generating about 0.0 per unit of risk. If you would invest 2,633 in NiSource on September 3, 2024 and sell it today you would earn a total of 1,176 from holding NiSource or generate 44.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. Constellation Brands Class
Performance |
| Timeline |
| NiSource |
| Constellation Brands |
NiSource and Constellation Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Constellation Brands
The main advantage of trading using opposite NiSource and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Constellation Brands 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 Constellation Brands will offset losses from the drop in Constellation Brands' long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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