Correlation Between NiSource Unit and OPAL Fuels
Can any of the company-specific risk be diversified away by investing in both NiSource Unit and OPAL Fuels 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 Unit and OPAL Fuels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource Unit and OPAL Fuels, you can compare the effects of market volatilities on NiSource Unit and OPAL Fuels 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 Unit with a short position of OPAL Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource Unit and OPAL Fuels.
Diversification Opportunities for NiSource Unit and OPAL Fuels
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NiSource and OPAL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NiSource Unit and OPAL Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPAL Fuels and NiSource Unit 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 Unit are associated (or correlated) with OPAL Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPAL Fuels has no effect on the direction of NiSource Unit i.e., NiSource Unit and OPAL Fuels go up and down completely randomly.
Pair Corralation between NiSource Unit and OPAL Fuels
If you would invest 10,307 in NiSource Unit on August 30, 2024 and sell it today you would earn a total of 0.00 from holding NiSource Unit or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
NiSource Unit vs. OPAL Fuels
Performance |
| Timeline |
| NiSource Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| OPAL Fuels |
NiSource Unit and OPAL Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource Unit and OPAL Fuels
The main advantage of trading using opposite NiSource Unit and OPAL Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource Unit position performs unexpectedly, OPAL Fuels 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 OPAL Fuels will offset losses from the drop in OPAL Fuels' long position.The idea behind NiSource Unit and OPAL Fuels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| OPAL Fuels vs. Northwest Natural Gas | OPAL Fuels vs. Chesapeake Utilities | OPAL Fuels vs. One Gas | OPAL Fuels vs. NewJersey Resources |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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