Correlation Between Centerra Gold and NISOURCE

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

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

Diversification Opportunities for Centerra Gold and NISOURCE

0.37

Correlation Coefficient

Centerra Gold  NISOURCE

Weak diversification

The 3 months correlation between Centerra and NISOURCE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and NISOURCE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE INC and Centerra Gold 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 Centerra Gold 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 Centerra Gold i.e., Centerra Gold and NISOURCE go up and down completely randomly.

Pair Corralation between Centerra Gold and NISOURCE

Given the investment horizon of 90 days Centerra Gold is expected to under-perform the NISOURCE. In addition to that, Centerra Gold is 1.55 times more volatile than NISOURCE INC. It trades about -0.16 of its total potential returns per unit of risk. NISOURCE INC is currently generating about -0.01 per unit of volatility. If you would invest  9,247  in NISOURCE INC on October 21, 2024 and sell it today you would lose (143.00) from holding NISOURCE INC or give up 1.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

Centerra Gold  vs.  NISOURCE INC

Centerra Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centerra Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 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.

Pair Trading with Centerra Gold and NISOURCE

The main advantage of trading using opposite Centerra Gold and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerra Gold 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 Centerra Gold 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.