Correlation Between Utilities Fund and NiSource
Can any of the company-specific risk be diversified away by investing in both Utilities Fund 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 Utilities Fund and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Utilities Fund Class and NiSource, you can compare the effects of market volatilities on Utilities Fund 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 Utilities Fund with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Fund and NiSource.
Diversification Opportunities for Utilities Fund and NiSource
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Utilities and NiSource is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Class and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Utilities Fund 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 Utilities Fund Class 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 Utilities Fund i.e., Utilities Fund and NiSource go up and down completely randomly.
Pair Corralation between Utilities Fund and NiSource
Assuming the 90 days horizon Utilities Fund is expected to generate 2.29 times less return on investment than NiSource. In addition to that, Utilities Fund is 1.02 times more volatile than NiSource. It trades about 0.09 of its total potential returns per unit of risk. NiSource is currently generating about 0.21 per unit of volatility. If you would invest 3,297 in NiSource on September 4, 2024 and sell it today you would earn a total of 438.00 from holding NiSource or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Utilities Fund Class vs. NiSource
Performance |
| Timeline |
| Utilities Fund Class |
| NiSource |
Utilities Fund and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Fund and NiSource
The main advantage of trading using opposite Utilities Fund and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund 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.| Utilities Fund vs. Dominion Energy | Utilities Fund vs. Atlantica Sustainable Infrastructure | Utilities Fund vs. Consolidated Edison | Utilities Fund vs. Eversource Energy |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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