Correlation Between NiSource Unit and OPAL Fuels

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

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

Diversification Opportunities for NiSource Unit and OPAL Fuels

0.0

Correlation Coefficient

NiSource Unit  OPAL Fuels

Pay attention - limited upside

The 3 months correlation between NiSource and OPAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NiSource Unit and OPAL Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPAL Fuels and NiSource Unit 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 Unit are associated (or correlated) with OPAL Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPAL Fuels has no effect on the direction of NiSource Unit i.e., NiSource Unit and OPAL Fuels go up and down completely randomly.

Pair Corralation between NiSource Unit and OPAL Fuels

If you would invest (100.00) in NiSource Unit on December 29, 2024 and sell it today you would earn a total of  100.00  from holding NiSource Unit or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

NiSource Unit  vs.  OPAL Fuels

NiSource Unit

Risk-Adjusted Performance

Very Weak

Over the last 90 days NiSource Unit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, NiSource Unit is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

OPAL Fuels

Risk-Adjusted Performance

Very Weak

Over the last 90 days OPAL Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with NiSource Unit and OPAL Fuels

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

The idea behind NiSource Unit and OPAL Fuels 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.