Correlation Between One Gas and NiSource

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

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

Diversification Opportunities for One Gas and NiSource

0.85

Correlation Coefficient

One Gas  NiSource

Very poor diversification

The 3 months correlation between One and NiSource is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding One Gas and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and One Gas 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 One Gas 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 has no effect on the direction of One Gas i.e., One Gas and NiSource go up and down completely randomly.

Pair Corralation between One Gas and NiSource

Considering the 90-day investment horizon One Gas is expected to generate 1.54 times less return on investment than NiSource. In addition to that, One Gas is 1.63 times more volatile than NiSource. It trades about 0.2 of its total potential returns per unit of risk. NiSource is currently generating about 0.49 per unit of volatility. If you would invest  3,416  in NiSource on August 30, 2024 and sell it today you would earn a total of  409.00  from holding NiSource or generate 11.97% return on investment over 90 days.

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

One Gas  vs.  NiSource

One Gas

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One Gas are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, One Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.

NiSource

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, NiSource demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One Gas and NiSource

The main advantage of trading using opposite One Gas and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Gas 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 One Gas and NiSource 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.