Correlation Between Safety Shot and NiSource

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

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

Diversification Opportunities for Safety Shot and NiSource

-0.79

Correlation Coefficient

Safety Shot  NiSource

Pay attention - limited upside

The 3 months correlation between Safety and NiSource is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Safety Shot 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 Safety Shot 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 Safety Shot i.e., Safety Shot and NiSource go up and down completely randomly.

Pair Corralation between Safety Shot and NiSource

Given the investment horizon of 90 days Safety Shot is expected to generate 5.47 times more return on investment than NiSource. However, Safety Shot is 5.47 times more volatile than NiSource. It trades about 0.02 of its potential returns per unit of risk. NiSource is currently generating about -0.19 per unit of risk. If you would invest  79.00  in Safety Shot on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Safety Shot or generate 0.0% return on investment over 90 days.

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

Safety Shot  vs.  NiSource

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot 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 basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NiSource

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 9 (%) 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 January 2025.

Pair Trading with Safety Shot and NiSource

The main advantage of trading using opposite Safety Shot and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Shot 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.

The idea behind Safety Shot and NiSource 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.