Correlation Between CONSOLIDATED and NiSource

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

By analyzing existing cross correlation between CONSOLIDATED EDISON N and NiSource, you can compare the effects of market volatilities on CONSOLIDATED 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 CONSOLIDATED with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONSOLIDATED and NiSource.

Diversification Opportunities for CONSOLIDATED and NiSource

-0.49

Correlation Coefficient

CONSOLIDATED  NiSource

Very good diversification

The 3 months correlation between CONSOLIDATED and NiSource is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CONSOLIDATED EDISON N and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and CONSOLIDATED 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 CONSOLIDATED EDISON N 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 has no effect on the direction of CONSOLIDATED i.e., CONSOLIDATED and NiSource go up and down completely randomly.

Pair Corralation between CONSOLIDATED and NiSource

Assuming the 90 days trading horizon CONSOLIDATED EDISON N is expected to under-perform the NiSource. In addition to that, CONSOLIDATED is 1.27 times more volatile than NiSource. It trades about -0.02 of its total potential returns per unit of risk. NiSource is currently generating about 0.09 per unit of volatility. If you would invest  3,602  in NiSource on September 15, 2024 and sell it today you would earn a total of  53.00  from holding NiSource or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

CONSOLIDATED EDISON N  vs.  NiSource

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for CONSOLIDATED EDISON N investors.

NiSource

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, NiSource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CONSOLIDATED and NiSource

The main advantage of trading using opposite CONSOLIDATED and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONSOLIDATED 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 CONSOLIDATED EDISON N and NiSource 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.