Correlation Between Transcontinental and NISOURCE

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

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

Diversification Opportunities for Transcontinental and NISOURCE

0.53

Correlation Coefficient

Transcontinental  NISOURCE

Very weak diversification

The 3 months correlation between Transcontinental and NISOURCE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental Realty Invest and NISOURCE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE INC and Transcontinental 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 Transcontinental Realty Investors 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 Transcontinental i.e., Transcontinental and NISOURCE go up and down completely randomly.

Pair Corralation between Transcontinental and NISOURCE

Considering the 90-day investment horizon Transcontinental Realty Investors is expected to under-perform the NISOURCE. In addition to that, Transcontinental is 7.91 times more volatile than NISOURCE INC. It trades about -0.01 of its total potential returns per unit of risk. NISOURCE INC is currently generating about 0.08 per unit of volatility. If you would invest  9,190  in NISOURCE INC on October 11, 2024 and sell it today you would earn a total of  539.00  from holding NISOURCE INC or generate 5.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.65%
Values	Daily Returns

Transcontinental Realty Invest  vs.  NISOURCE INC

Transcontinental Realty

Risk-Adjusted Performance

0 of 100

Weak

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

NISOURCE INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NISOURCE INC are ranked lower than 1 (%) 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 Transcontinental and NISOURCE

The main advantage of trading using opposite Transcontinental and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcontinental 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 Transcontinental Realty Investors 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.