Correlation Between OPAL Fuels and NiSource Unit

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

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

Diversification Opportunities for OPAL Fuels and NiSource Unit

-0.32

Correlation Coefficient

OPAL Fuels  NiSource Unit

Very good diversification

The 3 months correlation between OPAL and NiSource is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding OPAL Fuels and NiSource Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource Unit and OPAL Fuels 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 OPAL Fuels are associated (or correlated) with NiSource Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource Unit has no effect on the direction of OPAL Fuels i.e., OPAL Fuels and NiSource Unit go up and down completely randomly.

Pair Corralation between OPAL Fuels and NiSource Unit

If you would invest  10,307  in NiSource Unit on September 30, 2024 and sell it today you would earn a total of  0.00  from holding NiSource Unit or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

OPAL Fuels  vs.  NiSource Unit

OPAL Fuels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OPAL Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

NiSource Unit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NiSource Unit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, NiSource Unit is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with OPAL Fuels and NiSource Unit

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

The idea behind OPAL Fuels and NiSource Unit 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.