Correlation Between Corporate Travel and NiSource

Can any of the company-specific risk be diversified away by investing in both Corporate Travel 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 Corporate Travel and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Corporate Travel Management and NiSource, you can compare the effects of market volatilities on Corporate Travel 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 Corporate Travel with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and NiSource.

Diversification Opportunities for Corporate Travel and NiSource

0.78

Correlation Coefficient

Corporate Travel  NiSource

Poor diversification

The 3 months correlation between Corporate and NiSource is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Corporate Travel 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 Corporate Travel Management 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 Corporate Travel i.e., Corporate Travel and NiSource go up and down completely randomly.

Pair Corralation between Corporate Travel and NiSource

Assuming the 90 days trading horizon Corporate Travel Management is expected to under-perform the NiSource. In addition to that, Corporate Travel is 2.07 times more volatile than NiSource. It trades about -0.01 of its total potential returns per unit of risk. NiSource is currently generating about 0.07 per unit of volatility. If you would invest  2,292  in NiSource on October 10, 2024 and sell it today you would earn a total of  1,148  from holding NiSource or generate 50.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Corporate Travel Management  vs.  NiSource

Corporate Travel Man

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NiSource

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, NiSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corporate Travel and NiSource

The main advantage of trading using opposite Corporate Travel and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel 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.

The idea behind Corporate Travel Management and NiSource 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.