Correlation Between NiSource and ReAlpha Tech

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

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

Diversification Opportunities for NiSource and ReAlpha Tech

0.15

Correlation Coefficient

NiSource  ReAlpha Tech

Average diversification

The 3 months correlation between NiSource and ReAlpha is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and reAlpha Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on reAlpha Tech Corp and NiSource 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 NiSource are associated (or correlated) with ReAlpha Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of reAlpha Tech Corp has no effect on the direction of NiSource i.e., NiSource and ReAlpha Tech go up and down completely randomly.

Pair Corralation between NiSource and ReAlpha Tech

Allowing for the 90-day total investment horizon NiSource is expected to under-perform the ReAlpha Tech. But the stock apears to be less risky and, when comparing its historical volatility, NiSource is 29.94 times less risky than ReAlpha Tech. The stock trades about -0.03 of its potential returns per unit of risk. The reAlpha Tech Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  105.00  in reAlpha Tech Corp on October 9, 2024 and sell it today you would earn a total of  115.00  from holding reAlpha Tech Corp or generate 109.52% return on investment over 90 days.

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

NiSource  vs.  reAlpha Tech Corp

NiSource

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, NiSource is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

reAlpha Tech Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in reAlpha Tech Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, ReAlpha Tech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NiSource and ReAlpha Tech

The main advantage of trading using opposite NiSource and ReAlpha Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource position performs unexpectedly, ReAlpha Tech 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 ReAlpha Tech will offset losses from the drop in ReAlpha Tech's long position.

The idea behind NiSource and reAlpha Tech Corp 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.