Correlation Between Boston Beer and NISOURCE

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

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

Diversification Opportunities for Boston Beer and NISOURCE

0.52

Correlation Coefficient

Boston Beer  NISOURCE

Very weak diversification

The 3 months correlation between Boston and NISOURCE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer 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 Boston Beer 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 Boston Beer 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 Boston Beer i.e., Boston Beer and NISOURCE go up and down completely randomly.

Pair Corralation between Boston Beer and NISOURCE

Considering the 90-day investment horizon Boston Beer is expected to under-perform the NISOURCE. In addition to that, Boston Beer is 2.44 times more volatile than NISOURCE FIN P. It trades about -0.21 of its total potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.05 per unit of volatility. If you would invest  8,889  in NISOURCE FIN P on December 25, 2024 and sell it today you would earn a total of  146.00  from holding NISOURCE FIN P or generate 1.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	76.67%
Values	Daily Returns

Boston Beer  vs.  NISOURCE FIN P

Boston Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

NISOURCE FIN P

Risk-Adjusted Performance

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boston Beer and NISOURCE

The main advantage of trading using opposite Boston Beer and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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 Boston Beer 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.