Correlation Between NISOURCE and Sandstorm Gold

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

Diversification Opportunities for NISOURCE and Sandstorm Gold

0.35

Correlation Coefficient

NISOURCE  Sandstorm Gold

Weak diversification

The 3 months correlation between NISOURCE and Sandstorm is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding NISOURCE FIN P and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of NISOURCE i.e., NISOURCE and Sandstorm Gold go up and down completely randomly.

Pair Corralation between NISOURCE and Sandstorm Gold

Assuming the 90 days trading horizon NISOURCE FIN P is expected to generate 0.88 times more return on investment than Sandstorm Gold. However, NISOURCE FIN P is 1.14 times less risky than Sandstorm Gold. It trades about -0.07 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.18 per unit of risk. If you would invest  7,967  in NISOURCE FIN P on September 24, 2024 and sell it today you would lose (206.00) from holding NISOURCE FIN P or give up 2.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NISOURCE FIN P  vs.  Sandstorm Gold Ltd

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 latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NISOURCE FIN P investors.

Sandstorm Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandstorm Gold Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NISOURCE and Sandstorm Gold

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

The idea behind NISOURCE FIN P and Sandstorm Gold Ltd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.