Correlation Between Invesco Floating and NISOURCE

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Can any of the company-specific risk be diversified away by investing in both Invesco Floating 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 Invesco Floating and NISOURCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Floating Rate and NISOURCE FIN P, you can compare the effects of market volatilities on Invesco Floating 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 Invesco Floating with a short position of NISOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Floating and NISOURCE.

Diversification Opportunities for Invesco Floating and NISOURCE

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Invesco and NISOURCE is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Floating Rate 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 Invesco Floating 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 Invesco Floating Rate 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 Invesco Floating i.e., Invesco Floating and NISOURCE go up and down completely randomly.

Pair Corralation between Invesco Floating and NISOURCE

Assuming the 90 days horizon Invesco Floating is expected to generate 54.15 times less return on investment than NISOURCE. But when comparing it to its historical volatility, Invesco Floating Rate is 235.26 times less risky than NISOURCE. It trades about 0.18 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,488  in NISOURCE FIN P on September 23, 2024 and sell it today you would earn a total of  135.00  from holding NISOURCE FIN P or generate 1.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy91.15%
ValuesDaily Returns

Invesco Floating Rate  vs.  NISOURCE FIN P

 Performance 
       Timeline  
Invesco Floating Rate 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Floating Rate are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Invesco Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
NISOURCE FIN P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Floating and NISOURCE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Invesco Floating and NISOURCE

The main advantage of trading using opposite Invesco Floating and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Floating 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 Invesco Floating Rate 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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