Correlation Between Pure Cycle and NiSource
Can any of the company-specific risk be diversified away by investing in both Pure Cycle and NiSource 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 Pure Cycle and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Cycle and NiSource, you can compare the effects of market volatilities on Pure Cycle and NiSource 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 Pure Cycle with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Cycle and NiSource.
Diversification Opportunities for Pure Cycle and NiSource
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pure and NiSource is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pure Cycle and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Pure Cycle 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 Pure Cycle are associated (or correlated) with NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Pure Cycle i.e., Pure Cycle and NiSource go up and down completely randomly.
Pair Corralation between Pure Cycle and NiSource
Given the investment horizon of 90 days Pure Cycle is expected to generate 1.05 times less return on investment than NiSource. In addition to that, Pure Cycle is 1.73 times more volatile than NiSource. It trades about 0.04 of its total potential returns per unit of risk. NiSource is currently generating about 0.07 per unit of volatility. If you would invest 2,558 in NiSource on August 26, 2024 and sell it today you would earn a total of 1,213 from holding NiSource or generate 47.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Cycle vs. NiSource
Performance |
| Timeline |
| Pure Cycle |
| NiSource |
Pure Cycle and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Cycle and NiSource
The main advantage of trading using opposite Pure Cycle and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Cycle position performs unexpectedly, NiSource 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 NiSource will offset losses from the drop in NiSource's long position.| Pure Cycle vs. Cadiz Inc | Pure Cycle vs. Artesian Resources | Pure Cycle vs. Global Water Resources | Pure Cycle vs. Parke Bancorp |
| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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