Correlation Between Companhia Paranaense and NiSource

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

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

Diversification Opportunities for Companhia Paranaense and NiSource

-0.72

Correlation Coefficient

Companhia Paranaense  NiSource

Pay attention - limited upside

The 3 months correlation between Companhia and NiSource is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Companhia Paranaense 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 Companhia Paranaense de 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 has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and NiSource go up and down completely randomly.

Pair Corralation between Companhia Paranaense and NiSource

Considering the 90-day investment horizon Companhia Paranaense de is expected to under-perform the NiSource. In addition to that, Companhia Paranaense is 1.93 times more volatile than NiSource. It trades about -0.05 of its total potential returns per unit of risk. NiSource is currently generating about 0.15 per unit of volatility. If you would invest  2,562  in NiSource on September 24, 2024 and sell it today you would earn a total of  1,055  from holding NiSource or generate 41.18% return on investment over 90 days.

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

Companhia Paranaense de  vs.  NiSource

Companhia Paranaense

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Paranaense de has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

NiSource

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, NiSource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Companhia Paranaense and NiSource

The main advantage of trading using opposite Companhia Paranaense and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense 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 Companhia Paranaense de and NiSource 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.