Correlation Between Innovator Loup and NISOURCE

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

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

Diversification Opportunities for Innovator Loup and NISOURCE

-0.58

Correlation Coefficient

Innovator Loup  NISOURCE

Excellent diversification

The 3 months correlation between Innovator and NISOURCE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Loup Frontier 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 Innovator Loup 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 Innovator Loup Frontier 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 Innovator Loup i.e., Innovator Loup and NISOURCE go up and down completely randomly.

Pair Corralation between Innovator Loup and NISOURCE

Given the investment horizon of 90 days Innovator Loup is expected to generate 78.04 times less return on investment than NISOURCE. But when comparing it to its historical volatility, Innovator Loup Frontier is 69.19 times less risky than NISOURCE. It trades about 0.09 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10,084  in NISOURCE FIN P on September 23, 2024 and sell it today you would lose (1,046) from holding NISOURCE FIN P or give up 10.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	64.79%
Values	Daily Returns

Innovator Loup Frontier  vs.  NISOURCE FIN P

Innovator Loup Frontier

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Loup Frontier are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Innovator Loup reported 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 conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NISOURCE FIN P investors.

Pair Trading with Innovator Loup and NISOURCE

The main advantage of trading using opposite Innovator Loup and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Loup 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 Innovator Loup Frontier 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.