Correlation Between Ardelyx and NISOURCE

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

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

Diversification Opportunities for Ardelyx and NISOURCE

0.44

Correlation Coefficient

Ardelyx  NISOURCE

Very weak diversification

The 3 months correlation between Ardelyx and NISOURCE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ardelyx and NISOURCE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE INC and Ardelyx 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 Ardelyx 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 INC has no effect on the direction of Ardelyx i.e., Ardelyx and NISOURCE go up and down completely randomly.

Pair Corralation between Ardelyx and NISOURCE

Given the investment horizon of 90 days Ardelyx is expected to generate 5.58 times more return on investment than NISOURCE. However, Ardelyx is 5.58 times more volatile than NISOURCE INC. It trades about 0.02 of its potential returns per unit of risk. NISOURCE INC is currently generating about -0.02 per unit of risk. If you would invest  523.00  in Ardelyx on October 3, 2024 and sell it today you would lose (16.00) from holding Ardelyx or give up 3.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.15%
Values	Daily Returns

Ardelyx  vs.  NISOURCE INC

Ardelyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardelyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NISOURCE INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for NISOURCE INC investors.

Pair Trading with Ardelyx and NISOURCE

The main advantage of trading using opposite Ardelyx and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardelyx 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 Ardelyx and NISOURCE INC 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .