Correlation Between NiSource and Fidelity Telecom

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

By analyzing existing cross correlation between NiSource and Fidelity Telecom And, you can compare the effects of market volatilities on NiSource and Fidelity Telecom 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 Fidelity Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Fidelity Telecom.

Diversification Opportunities for NiSource and Fidelity Telecom

0.21

Correlation Coefficient

NiSource  Fidelity Telecom

Modest diversification

The 3 months correlation between NiSource and Fidelity is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Fidelity Telecom And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Telecom And 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 Fidelity Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Telecom And has no effect on the direction of NiSource i.e., NiSource and Fidelity Telecom go up and down completely randomly.

Pair Corralation between NiSource and Fidelity Telecom

Allowing for the 90-day total investment horizon NiSource is expected to generate 1.1 times more return on investment than Fidelity Telecom. However, NiSource is 1.1 times more volatile than Fidelity Telecom And. It trades about 0.14 of its potential returns per unit of risk. Fidelity Telecom And is currently generating about -0.06 per unit of risk. If you would invest  3,467  in NiSource on October 20, 2024 and sell it today you would earn a total of  344.00  from holding NiSource or generate 9.92% return on investment over 90 days.

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

NiSource  vs.  Fidelity Telecom And

NiSource

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, NiSource may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fidelity Telecom And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Telecom And has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fidelity Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NiSource and Fidelity Telecom

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

The idea behind NiSource and Fidelity Telecom And 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.