Correlation Between Remitly Global and NISOURCE

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

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

Diversification Opportunities for Remitly Global and NISOURCE

-0.71

Correlation Coefficient

Remitly Global  NISOURCE

Pay attention - limited upside

The 3 months correlation between Remitly and NISOURCE is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Remitly Global 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 Remitly Global 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 Remitly Global 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 Remitly Global i.e., Remitly Global and NISOURCE go up and down completely randomly.

Pair Corralation between Remitly Global and NISOURCE

Given the investment horizon of 90 days Remitly Global is expected to generate 60.04 times less return on investment than NISOURCE. But when comparing it to its historical volatility, Remitly Global is 35.56 times less risky than NISOURCE. It trades about 0.06 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,964  in NISOURCE FIN P on September 23, 2024 and sell it today you would earn a total of  94.00  from holding NISOURCE FIN P or generate 1.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	62.98%
Values	Daily Returns

Remitly Global  vs.  NISOURCE FIN P

Remitly Global

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Remitly Global are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Remitly Global showed solid returns over the last few months and may actually be approaching a breakup point.

NISOURCE FIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE FIN P 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Remitly Global and NISOURCE

The main advantage of trading using opposite Remitly Global and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Remitly Global 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 Remitly Global 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.