Correlation Between Everus Construction and NISOURCE

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

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

Diversification Opportunities for Everus Construction and NISOURCE

0.3

Correlation Coefficient

Everus Construction  NISOURCE

Weak diversification

The 3 months correlation between Everus and NISOURCE is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and NISOURCE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE INC and Everus Construction 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 Everus Construction Group 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 Everus Construction i.e., Everus Construction and NISOURCE go up and down completely randomly.

Pair Corralation between Everus Construction and NISOURCE

Considering the 90-day investment horizon Everus Construction Group is expected to generate 4.89 times more return on investment than NISOURCE. However, Everus Construction is 4.89 times more volatile than NISOURCE INC. It trades about 0.06 of its potential returns per unit of risk. NISOURCE INC is currently generating about -0.08 per unit of risk. If you would invest  6,695  in Everus Construction Group on October 10, 2024 and sell it today you would earn a total of  217.00  from holding Everus Construction Group or generate 3.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Everus Construction Group  vs.  NISOURCE INC

Everus Construction

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Everus Construction and NISOURCE

The main advantage of trading using opposite Everus Construction and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everus Construction 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 Everus Construction Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.