Correlation Between NiSource and PROVIDENCE

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

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

Diversification Opportunities for NiSource and PROVIDENCE

0.22

Correlation Coefficient

NiSource  PROVIDENCE

Modest diversification

The 3 months correlation between NiSource and PROVIDENCE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and PROVIDENCE HEALTH SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROVIDENCE HEALTH SVCS 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 PROVIDENCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROVIDENCE HEALTH SVCS has no effect on the direction of NiSource i.e., NiSource and PROVIDENCE go up and down completely randomly.

Pair Corralation between NiSource and PROVIDENCE

Allowing for the 90-day total investment horizon NiSource is expected to under-perform the PROVIDENCE. But the stock apears to be less risky and, when comparing its historical volatility, NiSource is 2.46 times less risky than PROVIDENCE. The stock trades about -0.02 of its potential returns per unit of risk. The PROVIDENCE HEALTH SVCS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8,049  in PROVIDENCE HEALTH SVCS on October 10, 2024 and sell it today you would earn a total of  1.00  from holding PROVIDENCE HEALTH SVCS or generate 0.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	33.33%
Values	Daily Returns

NiSource  vs.  PROVIDENCE HEALTH SVCS

NiSource

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 8 (%) 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.

PROVIDENCE HEALTH SVCS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PROVIDENCE HEALTH SVCS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PROVIDENCE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NiSource and PROVIDENCE

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

The idea behind NiSource and PROVIDENCE HEALTH SVCS 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.