Correlation Between NiSource and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both NiSource and Chesapeake Utilities 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 Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NiSource and Chesapeake Utilities, you can compare the effects of market volatilities on NiSource and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Chesapeake Utilities.
Diversification Opportunities for NiSource and Chesapeake Utilities
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NiSource and Chesapeake is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of NiSource i.e., NiSource and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between NiSource and Chesapeake Utilities
Assuming the 90 days horizon NiSource is expected to generate 0.85 times more return on investment than Chesapeake Utilities. However, NiSource is 1.18 times less risky than Chesapeake Utilities. It trades about 0.07 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.02 per unit of risk. If you would invest 2,366 in NiSource on September 25, 2024 and sell it today you would earn a total of 1,114 from holding NiSource or generate 47.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
NiSource vs. Chesapeake Utilities
Performance |
| Timeline |
| NiSource |
| Chesapeake Utilities |
NiSource and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NiSource and Chesapeake Utilities
The main advantage of trading using opposite NiSource and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| NiSource vs. CenterPoint Energy | NiSource vs. Snam SpA | NiSource vs. Atmos Energy | NiSource vs. China Resources Gas |
| Chesapeake Utilities vs. CenterPoint Energy | Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. Atmos Energy | Chesapeake Utilities vs. China Resources Gas |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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