Correlation Between Thunder Bridge and NISOURCE

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

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

Diversification Opportunities for Thunder Bridge and NISOURCE

-0.69

Correlation Coefficient

Thunder Bridge  NISOURCE

Excellent diversification

The 3 months correlation between Thunder and NISOURCE is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Bridge Capital 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 Thunder Bridge 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 Thunder Bridge Capital 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 Thunder Bridge i.e., Thunder Bridge and NISOURCE go up and down completely randomly.

Pair Corralation between Thunder Bridge and NISOURCE

Assuming the 90 days horizon Thunder Bridge is expected to generate 35.89 times less return on investment than NISOURCE. But when comparing it to its historical volatility, Thunder Bridge Capital is 32.08 times less risky than NISOURCE. It trades about 0.04 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,468  in NISOURCE FIN P on September 23, 2024 and sell it today you would earn a total of  90.00  from holding NISOURCE FIN P or generate 0.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.82%
Values	Daily Returns

Thunder Bridge Capital  vs.  NISOURCE FIN P

Thunder Bridge Capital

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Thunder Bridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Thunder Bridge unveiled 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thunder Bridge and NISOURCE

The main advantage of trading using opposite Thunder Bridge and NISOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thunder Bridge 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 Thunder Bridge Capital 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.