Correlation Between Nuveen ESG and NISOURCE

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

By analyzing existing cross correlation between Nuveen ESG Mid Cap and NISOURCE FIN P, you can compare the effects of market volatilities on Nuveen ESG and NISOURCE 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 Nuveen ESG with a short position of NISOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen ESG and NISOURCE.

Diversification Opportunities for Nuveen ESG and NISOURCE

-0.1

Correlation Coefficient

Nuveen ESG  NISOURCE

Good diversification

The 3 months correlation between Nuveen and NISOURCE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Mid Cap and NISOURCE FIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE FIN P and Nuveen ESG 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 Nuveen ESG Mid Cap are associated (or correlated) with NISOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISOURCE FIN P has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and NISOURCE go up and down completely randomly.

Pair Corralation between Nuveen ESG and NISOURCE

Given the investment horizon of 90 days Nuveen ESG is expected to generate 1.03 times less return on investment than NISOURCE. But when comparing it to its historical volatility, Nuveen ESG Mid Cap is 1.63 times less risky than NISOURCE. It trades about 0.08 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  10,535  in NISOURCE FIN P on October 10, 2024 and sell it today you would earn a total of  128.00  from holding NISOURCE FIN P or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.23%
Values	Daily Returns

Nuveen ESG Mid Cap  vs.  NISOURCE FIN P

Nuveen ESG Mid

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Mid Cap are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Nuveen ESG is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

NISOURCE FIN P

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NISOURCE FIN P are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NISOURCE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen ESG and NISOURCE

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

The idea behind Nuveen ESG Mid Cap and NISOURCE FIN P 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.