Correlation Between NiSource and Enags SA

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

By analyzing existing cross correlation between NiSource and Enags SA, you can compare the effects of market volatilities on NiSource and Enags SA 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 Enags SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NiSource and Enags SA.

Diversification Opportunities for NiSource and Enags SA

-0.81

Correlation Coefficient

NiSource  Enags SA

Pay attention - limited upside

The 3 months correlation between NiSource and Enags is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Enags SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enags SA 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 are associated (or correlated) with Enags SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enags SA has no effect on the direction of NiSource i.e., NiSource and Enags SA go up and down completely randomly.

Pair Corralation between NiSource and Enags SA

Allowing for the 90-day total investment horizon NiSource is expected to generate 0.57 times more return on investment than Enags SA. However, NiSource is 1.76 times less risky than Enags SA. It trades about 0.23 of its potential returns per unit of risk. Enags SA is currently generating about 0.09 per unit of risk. If you would invest  2,724  in NiSource on February 2, 2024 and sell it today you would earn a total of  126.00  from holding NiSource or generate 4.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

NiSource  vs.  Enags SA

NiSource

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, NiSource may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Enags SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enags SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with NiSource and Enags SA

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

The idea behind NiSource and Enags SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.