Correlation Between Apple and NISOURCE

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

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

Diversification Opportunities for Apple and NISOURCE

0.41

Correlation Coefficient

Apple  NISOURCE

Very weak diversification

The 3 months correlation between Apple and NISOURCE is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and NISOURCE FIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE FIN P and Apple 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 Apple Inc 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 FIN P has no effect on the direction of Apple i.e., Apple and NISOURCE go up and down completely randomly.

Pair Corralation between Apple and NISOURCE

Given the investment horizon of 90 days Apple Inc is expected to under-perform the NISOURCE. In addition to that, Apple is 2.66 times more volatile than NISOURCE FIN P. It trades about -0.05 of its total potential returns per unit of risk. NISOURCE FIN P is currently generating about -0.08 per unit of volatility. If you would invest  9,743  in NISOURCE FIN P on October 26, 2024 and sell it today you would lose (185.00) from holding NISOURCE FIN P or give up 1.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	84.75%
Values	Daily Returns

Apple Inc  vs.  NISOURCE FIN P

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Apple is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

NISOURCE FIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE FIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NISOURCE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and NISOURCE

The main advantage of trading using opposite Apple and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc and NISOURCE FIN P 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.