Correlation Between Ecovyst and NISOURCE

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

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

Diversification Opportunities for Ecovyst and NISOURCE

-0.45

Correlation Coefficient

Ecovyst  NISOURCE

Very good diversification

The 3 months correlation between Ecovyst and NISOURCE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst 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 Ecovyst 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 Ecovyst 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 Ecovyst i.e., Ecovyst and NISOURCE go up and down completely randomly.

Pair Corralation between Ecovyst and NISOURCE

Given the investment horizon of 90 days Ecovyst is expected to generate 1.71 times more return on investment than NISOURCE. However, Ecovyst is 1.71 times more volatile than NISOURCE FIN P. It trades about 0.09 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about -0.07 per unit of risk. If you would invest  678.00  in Ecovyst on October 7, 2024 and sell it today you would earn a total of  96.00  from holding Ecovyst or generate 14.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.25%
Values	Daily Returns

Ecovyst  vs.  NISOURCE FIN P

Ecovyst

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ecovyst unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NISOURCE FIN P investors.

Pair Trading with Ecovyst and NISOURCE

The main advantage of trading using opposite Ecovyst and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecovyst 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 Ecovyst 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.