Correlation Between NiSource and United States
Can any of the company-specific risk be diversified away by investing in both NiSource and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and United States Cellular, you can compare the effects of market volatilities on NiSource and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and United States.
Diversification Opportunities for NiSource and United States
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NiSource and United is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of NiSource i.e., NiSource and United States go up and down completely randomly.
Pair Corralation between NiSource and United States
Allowing for the 90-day total investment horizon NiSource is expected to generate 1.25 times less return on investment than United States. But when comparing it to its historical volatility, NiSource is 1.69 times less risky than United States. It trades about 0.08 of its potential returns per unit of risk. United States Cellular is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,495 in United States Cellular on August 24, 2024 and sell it today you would earn a total of 782.00 from holding United States Cellular or generate 52.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource vs. United States Cellular
Performance |
| Timeline |
| NiSource |
| United States Cellular |
NiSource and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and United States
The main advantage of trading using opposite NiSource and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
| United States vs. United States Cellular | United States vs. United States Cellular | United States vs. Office Properties Income | United States vs. Southern Company Series |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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