Correlation Between Coty and NISOURCE

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

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

Diversification Opportunities for Coty and NISOURCE

0.52

Correlation Coefficient

Coty  NISOURCE

Very weak diversification

The 3 months correlation between Coty and NISOURCE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Coty 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 Coty 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 Coty 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 Coty i.e., Coty and NISOURCE go up and down completely randomly.

Pair Corralation between Coty and NISOURCE

Given the investment horizon of 90 days Coty Inc is expected to under-perform the NISOURCE. In addition to that, Coty is 1.58 times more volatile than NISOURCE FIN P. It trades about -0.19 of its total potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.01 per unit of volatility. If you would invest  8,625  in NISOURCE FIN P on October 10, 2024 and sell it today you would earn a total of  35.00  from holding NISOURCE FIN P or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.87%
Values	Daily Returns

Coty Inc  vs.  NISOURCE FIN P

Coty Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic 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 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Coty and NISOURCE

The main advantage of trading using opposite Coty and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coty 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 Coty 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.