Correlation Between KLA Tencor and NiSource
Can any of the company-specific risk be diversified away by investing in both KLA Tencor 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 KLA Tencor and NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and NiSource, you can compare the effects of market volatilities on KLA Tencor 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 KLA Tencor with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and NiSource.
Diversification Opportunities for KLA Tencor and NiSource
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KLA and NiSource is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and KLA Tencor 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 KLA Tencor 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 KLA Tencor i.e., KLA Tencor and NiSource go up and down completely randomly.
Pair Corralation between KLA Tencor and NiSource
Given the investment horizon of 90 days KLA Tencor is expected to generate 2.18 times more return on investment than NiSource. However, KLA Tencor is 2.18 times more volatile than NiSource. It trades about 0.05 of its potential returns per unit of risk. NiSource is currently generating about 0.09 per unit of risk. If you would invest 64,322 in KLA Tencor on September 15, 2024 and sell it today you would earn a total of 1,054 from holding KLA Tencor or generate 1.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
KLA Tencor vs. NiSource
Performance |
Timeline |
KLA Tencor |
NiSource |
KLA Tencor and NiSource Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KLA Tencor and NiSource
The main advantage of trading using opposite KLA Tencor and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor 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.KLA Tencor vs. Applied Materials | ||
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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