Correlation Between NISOURCE and Keurig Dr

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

Diversification Opportunities for NISOURCE and Keurig Dr

0.05

Correlation Coefficient

NISOURCE  Keurig Dr

Significant diversification

The 3 months correlation between NISOURCE and Keurig is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NISOURCE FIN P and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of NISOURCE i.e., NISOURCE and Keurig Dr go up and down completely randomly.

Pair Corralation between NISOURCE and Keurig Dr

Assuming the 90 days trading horizon NISOURCE FIN P is expected to generate 0.66 times more return on investment than Keurig Dr. However, NISOURCE FIN P is 1.52 times less risky than Keurig Dr. It trades about 0.0 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.08 per unit of risk. If you would invest  9,713  in NISOURCE FIN P on October 24, 2024 and sell it today you would lose (1.00) from holding NISOURCE FIN P or give up 0.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.47%
Values	Daily Returns

NISOURCE FIN P  vs.  Keurig Dr Pepper

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

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with NISOURCE and Keurig Dr

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

The idea behind NISOURCE FIN P and Keurig Dr Pepper 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.