Correlation Between Spring Valley and NiSource

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

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

Diversification Opportunities for Spring Valley and NiSource

0.48

Correlation Coefficient

Spring Valley  NiSource

Very weak diversification

The 3 months correlation between Spring and NiSource is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource and Spring Valley 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 Spring Valley Acquisition 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 Spring Valley i.e., Spring Valley and NiSource go up and down completely randomly.

Pair Corralation between Spring Valley and NiSource

Assuming the 90 days horizon Spring Valley Acquisition is expected to generate 13.88 times more return on investment than NiSource. However, Spring Valley is 13.88 times more volatile than NiSource. It trades about 0.14 of its potential returns per unit of risk. NiSource is currently generating about 0.11 per unit of risk. If you would invest  8.83  in Spring Valley Acquisition on April 21, 2025 and sell it today you would earn a total of  5.17  from holding Spring Valley Acquisition or generate 58.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.67%
Values	Daily Returns

Spring Valley Acquisition  vs.  NiSource

Spring Valley Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spring Valley Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward indicators, Spring Valley reported solid returns over the last few months and may actually be approaching a breakup point.

NiSource

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, NiSource may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Spring Valley and NiSource

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

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.