Correlation Between Chicago Atlantic and NISOURCE

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

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

Diversification Opportunities for Chicago Atlantic and NISOURCE

0.43

Correlation Coefficient

Chicago Atlantic  NISOURCE

Very weak diversification

The 3 months correlation between Chicago and NISOURCE is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic Real and NISOURCE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE INC and Chicago Atlantic 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 Chicago Atlantic Real 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 INC has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and NISOURCE go up and down completely randomly.

Pair Corralation between Chicago Atlantic and NISOURCE

Given the investment horizon of 90 days Chicago Atlantic Real is expected to generate 1.24 times more return on investment than NISOURCE. However, Chicago Atlantic is 1.24 times more volatile than NISOURCE INC. It trades about -0.01 of its potential returns per unit of risk. NISOURCE INC is currently generating about -0.1 per unit of risk. If you would invest  1,550  in Chicago Atlantic Real on December 24, 2024 and sell it today you would lose (11.00) from holding Chicago Atlantic Real or give up 0.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.8%
Values	Daily Returns

Chicago Atlantic Real  vs.  NISOURCE INC

Chicago Atlantic Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chicago Atlantic Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Chicago Atlantic is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

NISOURCE INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days NISOURCE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NISOURCE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chicago Atlantic and NISOURCE

The main advantage of trading using opposite Chicago Atlantic and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicago Atlantic 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 Chicago Atlantic Real and NISOURCE INC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.