Correlation Between NiSource and Vistra Energy

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

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

Diversification Opportunities for NiSource and Vistra Energy

-0.35

Correlation Coefficient

NiSource  Vistra Energy

Very good diversification

The 3 months correlation between NiSource and Vistra is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Vistra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Energy 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 Vistra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Energy Corp has no effect on the direction of NiSource i.e., NiSource and Vistra Energy go up and down completely randomly.

Pair Corralation between NiSource and Vistra Energy

Allowing for the 90-day total investment horizon NiSource is expected to generate 0.22 times more return on investment than Vistra Energy. However, NiSource is 4.54 times less risky than Vistra Energy. It trades about 0.12 of its potential returns per unit of risk. Vistra Energy Corp is currently generating about -0.01 per unit of risk. If you would invest  3,642  in NiSource on December 28, 2024 and sell it today you would earn a total of  333.00  from holding NiSource or generate 9.14% return on investment over 90 days.

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

NiSource  vs.  Vistra Energy Corp

NiSource

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 9 (%) 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 April 2025.

Vistra Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vistra Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vistra Energy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NiSource and Vistra Energy

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

The idea behind NiSource and Vistra Energy 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.