Correlation Between NiSource and BCE

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

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

Diversification Opportunities for NiSource and BCE

-0.83

Correlation Coefficient

NiSource  BCE

Pay attention - limited upside

The 3 months correlation between NiSource and BCE is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of NiSource i.e., NiSource and BCE go up and down completely randomly.

Pair Corralation between NiSource and BCE

Allowing for the 90-day total investment horizon NiSource is expected to generate 0.66 times more return on investment than BCE. However, NiSource is 1.51 times less risky than BCE. It trades about 0.1 of its potential returns per unit of risk. BCE Inc is currently generating about -0.39 per unit of risk. If you would invest  3,401  in NiSource on September 23, 2024 and sell it today you would earn a total of  216.00  from holding NiSource or generate 6.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

NiSource  vs.  BCE Inc

NiSource

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, NiSource is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

BCE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental 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 BCE

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

The idea behind NiSource and BCE Inc 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.