Correlation Between Snam SpA and NiSource
Can any of the company-specific risk be diversified away by investing in both Snam SpA 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 Snam SpA and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snam SpA ADR and NiSource, you can compare the effects of market volatilities on Snam SpA 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 Snam SpA with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snam SpA and NiSource.
Diversification Opportunities for Snam SpA and NiSource
Pay attention - limited upside
The 3 months correlation between Snam and NiSource is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Snam SpA ADR and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Snam SpA 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 Snam SpA ADR 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 Snam SpA i.e., Snam SpA and NiSource go up and down completely randomly.
Pair Corralation between Snam SpA and NiSource
Assuming the 90 days horizon Snam SpA is expected to generate 5.57 times less return on investment than NiSource. In addition to that, Snam SpA is 1.11 times more volatile than NiSource. It trades about 0.01 of its total potential returns per unit of risk. NiSource is currently generating about 0.06 per unit of volatility. If you would invest 2,589 in NiSource on September 19, 2024 and sell it today you would earn a total of 1,032 from holding NiSource or generate 39.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Snam SpA ADR vs. NiSource
Performance |
| Timeline |
| Snam SpA ADR |
| NiSource |
Snam SpA and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snam SpA and NiSource
The main advantage of trading using opposite Snam SpA and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snam SpA 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.| Snam SpA vs. NiSource | Snam SpA vs. NewJersey Resources | Snam SpA vs. Northwest Natural Gas | Snam SpA vs. UGI Corporation |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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