Correlation Between BANK HANDLOWY and NiSource

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

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

Diversification Opportunities for BANK HANDLOWY and NiSource

-0.41

Correlation Coefficient

BANK HANDLOWY  NiSource

Very good diversification

The 3 months correlation between BANK and NiSource is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BANK HANDLOWY and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY i.e., BANK HANDLOWY and NiSource go up and down completely randomly.

Pair Corralation between BANK HANDLOWY and NiSource

Assuming the 90 days trading horizon BANK HANDLOWY is expected to under-perform the NiSource. In addition to that, BANK HANDLOWY is 1.08 times more volatile than NiSource. It trades about -0.12 of its total potential returns per unit of risk. NiSource is currently generating about 0.09 per unit of volatility. If you would invest  3,480  in NiSource on October 7, 2024 and sell it today you would earn a total of  40.00  from holding NiSource or generate 1.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BANK HANDLOWY  vs.  NiSource

BANK HANDLOWY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK HANDLOWY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BANK HANDLOWY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

NiSource

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NiSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK HANDLOWY and NiSource

The main advantage of trading using opposite BANK HANDLOWY and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK HANDLOWY 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 BANK HANDLOWY 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.