Correlation Between NISOURCE and Everus Construction

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Can any of the company-specific risk be diversified away by investing in both NISOURCE and Everus Construction 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 NISOURCE and Everus Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NISOURCE INC and Everus Construction Group, you can compare the effects of market volatilities on NISOURCE and Everus Construction 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 NISOURCE with a short position of Everus Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISOURCE and Everus Construction.

Diversification Opportunities for NISOURCE and Everus Construction

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between NISOURCE and Everus is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding NISOURCE INC and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction and NISOURCE 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 NISOURCE INC are associated (or correlated) with Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of NISOURCE i.e., NISOURCE and Everus Construction go up and down completely randomly.

Pair Corralation between NISOURCE and Everus Construction

Assuming the 90 days trading horizon NISOURCE INC is expected to under-perform the Everus Construction. But the bond apears to be less risky and, when comparing its historical volatility, NISOURCE INC is 2.06 times less risky than Everus Construction. The bond trades about -0.25 of its potential returns per unit of risk. The Everus Construction Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,391  in Everus Construction Group on September 24, 2024 and sell it today you would earn a total of  318.00  from holding Everus Construction Group or generate 4.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

NISOURCE INC  vs.  Everus Construction Group

 Performance 
       Timeline  
NISOURCE INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NISOURCE INC 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 current stock price disturbance, may contribute to short-term losses for the investors.
Everus Construction 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

NISOURCE and Everus Construction Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NISOURCE and Everus Construction

The main advantage of trading using opposite NISOURCE and Everus Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISOURCE position performs unexpectedly, Everus Construction 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 Everus Construction will offset losses from the drop in Everus Construction's long position.
The idea behind NISOURCE INC and Everus Construction Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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