Correlation Between NiSource Unit and UGI Corp
Can any of the company-specific risk be diversified away by investing in both NiSource Unit and UGI Corp 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 UGI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource Unit and UGI Corp Unit, you can compare the effects of market volatilities on NiSource Unit and UGI Corp 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 UGI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource Unit and UGI Corp.
Diversification Opportunities for NiSource Unit and UGI Corp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NiSource and UGI is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding NiSource Unit and UGI Corp Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UGI Corp Unit 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 UGI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UGI Corp Unit has no effect on the direction of NiSource Unit i.e., NiSource Unit and UGI Corp go up and down completely randomly.
Pair Corralation between NiSource Unit and UGI Corp
If you would invest 6,581 in UGI Corp Unit on August 24, 2024 and sell it today you would earn a total of 0.00 from holding UGI Corp Unit or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NiSource Unit vs. UGI Corp Unit
Performance |
| Timeline |
| NiSource Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| UGI Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NiSource Unit and UGI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource Unit and UGI Corp
The main advantage of trading using opposite NiSource Unit and UGI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource Unit position performs unexpectedly, UGI Corp 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 UGI Corp will offset losses from the drop in UGI Corp's long position.The idea behind NiSource Unit and UGI Corp Unit 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.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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