Correlation Between NISOURCE and Kyndryl Holdings

Can any of the company-specific risk be diversified away by investing in both NISOURCE and Kyndryl Holdings 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 Kyndryl Holdings 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 Kyndryl Holdings, you can compare the effects of market volatilities on NISOURCE and Kyndryl Holdings 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 Kyndryl Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISOURCE and Kyndryl Holdings.

Diversification Opportunities for NISOURCE and Kyndryl Holdings

0.78

Correlation Coefficient

NISOURCE  Kyndryl Holdings

Poor diversification

The 3 months correlation between NISOURCE and Kyndryl is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding NISOURCE FIN P and Kyndryl Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyndryl Holdings 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 Kyndryl Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyndryl Holdings has no effect on the direction of NISOURCE i.e., NISOURCE and Kyndryl Holdings go up and down completely randomly.

Pair Corralation between NISOURCE and Kyndryl Holdings

Assuming the 90 days trading horizon NISOURCE FIN P is expected to under-perform the Kyndryl Holdings. But the bond apears to be less risky and, when comparing its historical volatility, NISOURCE FIN P is 1.89 times less risky than Kyndryl Holdings. The bond trades about -0.21 of its potential returns per unit of risk. The Kyndryl Holdings is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,349  in Kyndryl Holdings on October 7, 2024 and sell it today you would earn a total of  1,375  from holding Kyndryl Holdings or generate 58.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	58.73%
Values	Daily Returns

NISOURCE FIN P  vs.  Kyndryl Holdings

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 fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for NISOURCE FIN P investors.

Kyndryl Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Kyndryl Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NISOURCE and Kyndryl Holdings

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

The idea behind NISOURCE FIN P and Kyndryl Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.