Correlation Between NiSource and Pinterest

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

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

Diversification Opportunities for NiSource and Pinterest

-0.61

Correlation Coefficient

NiSource  Pinterest

Excellent diversification

The 3 months correlation between NiSource and Pinterest is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of NiSource i.e., NiSource and Pinterest go up and down completely randomly.

Pair Corralation between NiSource and Pinterest

Allowing for the 90-day total investment horizon NiSource is expected to under-perform the Pinterest. But the stock apears to be less risky and, when comparing its historical volatility, NiSource is 2.48 times less risky than Pinterest. The stock trades about -0.23 of its potential returns per unit of risk. The Pinterest is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,002  in Pinterest on September 23, 2024 and sell it today you would lose (53.00) from holding Pinterest or give up 1.77% of portfolio value over 90 days.

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

NiSource  vs.  Pinterest

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.

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NiSource and Pinterest

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

The idea behind NiSource and Pinterest 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.