Correlation Between NISOURCE and Hawkins

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

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

Diversification Opportunities for NISOURCE and Hawkins

0.34

Correlation Coefficient

NISOURCE  Hawkins

Weak diversification

The 3 months correlation between NISOURCE and Hawkins is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding NISOURCE FIN P and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 FIN P are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of NISOURCE i.e., NISOURCE and Hawkins go up and down completely randomly.

Pair Corralation between NISOURCE and Hawkins

Assuming the 90 days trading horizon NISOURCE FIN P is expected to generate 0.61 times more return on investment than Hawkins. However, NISOURCE FIN P is 1.65 times less risky than Hawkins. It trades about 0.34 of its potential returns per unit of risk. Hawkins is currently generating about -0.17 per unit of risk. If you would invest  10,400  in NISOURCE FIN P on September 24, 2024 and sell it today you would earn a total of  263.00  from holding NISOURCE FIN P or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	23.81%
Values	Daily Returns

NISOURCE FIN P  vs.  Hawkins

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

Hawkins

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward-looking signals, Hawkins may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NISOURCE and Hawkins

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

The idea behind NISOURCE FIN P and Hawkins 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.