Correlation Between NISOURCE and Palantir Technologies

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

Diversification Opportunities for NISOURCE and Palantir Technologies

-0.69

Correlation Coefficient

NISOURCE  Palantir Technologies

Excellent diversification

The 3 months correlation between NISOURCE and Palantir is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding NISOURCE FIN P and Palantir Technologies Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies 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 Palantir Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir Technologies has no effect on the direction of NISOURCE i.e., NISOURCE and Palantir Technologies go up and down completely randomly.

Pair Corralation between NISOURCE and Palantir Technologies

Assuming the 90 days trading horizon NISOURCE FIN P is expected to under-perform the Palantir Technologies. But the bond apears to be less risky and, when comparing its historical volatility, NISOURCE FIN P is 3.18 times less risky than Palantir Technologies. The bond trades about -0.2 of its potential returns per unit of risk. The Palantir Technologies Class is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,294  in Palantir Technologies Class on October 22, 2024 and sell it today you would earn a total of  2,883  from holding Palantir Technologies Class or generate 67.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	54.84%
Values	Daily Returns

NISOURCE FIN P  vs.  Palantir Technologies Class

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 weak 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.

Palantir Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NISOURCE and Palantir Technologies

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

The idea behind NISOURCE FIN P and Palantir Technologies Class 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.

Check out your portfolio center.

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.