Correlation Between FinVolution and NISOURCE

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

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

Diversification Opportunities for FinVolution and NISOURCE

-0.04

Correlation Coefficient

FinVolution  NISOURCE

Good diversification

The 3 months correlation between FinVolution and NISOURCE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and NISOURCE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE INC and FinVolution 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 FinVolution 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 FinVolution i.e., FinVolution and NISOURCE go up and down completely randomly.

Pair Corralation between FinVolution and NISOURCE

Given the investment horizon of 90 days FinVolution Group is expected to generate 12.63 times more return on investment than NISOURCE. However, FinVolution is 12.63 times more volatile than NISOURCE INC. It trades about 0.19 of its potential returns per unit of risk. NISOURCE INC is currently generating about 0.15 per unit of risk. If you would invest  680.00  in FinVolution Group on December 28, 2024 and sell it today you would earn a total of  296.00  from holding FinVolution Group or generate 43.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

FinVolution Group  vs.  NISOURCE INC

FinVolution Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, FinVolution showed solid returns over the last few months and may actually be approaching a breakup point.

NISOURCE INC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NISOURCE INC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. 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 FinVolution and NISOURCE

The main advantage of trading using opposite FinVolution and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FinVolution 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 FinVolution 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 Transaction History module to view history of all your transactions and understand their impact on performance.