Correlation Between NISOURCE and Transcontinental

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

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

Diversification Opportunities for NISOURCE and Transcontinental

-0.06

Correlation Coefficient

NISOURCE  Transcontinental

Good diversification

The 3 months correlation between NISOURCE and Transcontinental is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NISOURCE INC and Transcontinental Realty Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental Realty 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 Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental Realty has no effect on the direction of NISOURCE i.e., NISOURCE and Transcontinental go up and down completely randomly.

Pair Corralation between NISOURCE and Transcontinental

Assuming the 90 days trading horizon NISOURCE is expected to generate 2.2 times less return on investment than Transcontinental. But when comparing it to its historical volatility, NISOURCE INC is 7.59 times less risky than Transcontinental. It trades about 0.01 of its potential returns per unit of risk. Transcontinental Realty Investors is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,927  in Transcontinental Realty Investors on December 27, 2024 and sell it today you would lose (27.00) from holding Transcontinental Realty Investors or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

NISOURCE INC  vs.  Transcontinental Realty Invest

NISOURCE INC

Risk-Adjusted Performance

Insignificant

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

Transcontinental Realty

Risk-Adjusted Performance

Very 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.

Pair Trading with NISOURCE and Transcontinental

The main advantage of trading using opposite NISOURCE and Transcontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISOURCE position performs unexpectedly, Transcontinental 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 Transcontinental will offset losses from the drop in Transcontinental's long position.

The idea behind NISOURCE INC and Transcontinental Realty Investors 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.