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
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENN and NiSource is 0.66. 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 trading horizon ENN Energy Holdings is expected to generate 4.22 times more return on investment than NiSource. However, ENN Energy is 4.22 times more volatile than NiSource. It trades about 0.13 of its potential returns per unit of risk. NiSource is currently generating about -0.24 per unit of risk. If you would invest 630.00 in ENN Energy Holdings on September 25, 2024 and sell it today you would earn a total of 45.00 from holding ENN Energy Holdings or generate 7.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ENN Energy Holdings vs. NiSource
Performance |
Timeline |
ENN Energy Holdings |
NiSource |
ENN Energy and NiSource Volatility Contrast
Predicted Return Density |
Returns |
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.ENN Energy vs. Transport International Holdings | ENN Energy vs. Micron Technology | ENN Energy vs. Check Point Software | ENN Energy vs. AECOM TECHNOLOGY |
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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.
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