Correlation Between ENN Energy and NiSource

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

By analyzing existing cross correlation between ENN Energy Holdings and NiSource, you can compare the effects of market volatilities on ENN Energy and NiSource 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 ENN Energy with a short position of NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENN Energy and NiSource.

Diversification Opportunities for ENN Energy and NiSource

0.52

Correlation Coefficient

ENN Energy  NiSource

Very weak diversification

The 3 months correlation between ENN and NiSource is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ENN Energy Holdings and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and ENN Energy 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 ENN Energy Holdings are associated (or correlated) with NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of ENN Energy i.e., ENN Energy and NiSource go up and down completely randomly.

Pair Corralation between ENN Energy and NiSource

Assuming the 90 days horizon ENN Energy Holdings is expected to generate 3.81 times more return on investment than NiSource. However, ENN Energy is 3.81 times more volatile than NiSource. It trades about 0.09 of its potential returns per unit of risk. NiSource is currently generating about 0.25 per unit of risk. If you would invest  620.00  in ENN Energy Holdings on October 6, 2024 and sell it today you would earn a total of  70.00  from holding ENN Energy Holdings or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

ENN Energy Holdings  vs.  NiSource

ENN Energy Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ENN Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NiSource

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NiSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ENN Energy and NiSource

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

The idea behind ENN Energy Holdings and NiSource 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.