Correlation Between Sempra Energy and Energy Of

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

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

Diversification Opportunities for Sempra Energy and Energy Of

-0.27

Correlation Coefficient

Sempra Energy  Energy Of

Very good diversification

The 3 months correlation between Sempra and Energy is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sempra Energy and Energy of Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy of Minas and Sempra Energy 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 Sempra Energy are associated (or correlated) with Energy Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy of Minas has no effect on the direction of Sempra Energy i.e., Sempra Energy and Energy Of go up and down completely randomly.

Pair Corralation between Sempra Energy and Energy Of

Considering the 90-day investment horizon Sempra Energy is expected to generate 0.64 times more return on investment than Energy Of. However, Sempra Energy is 1.56 times less risky than Energy Of. It trades about 0.12 of its potential returns per unit of risk. Energy of Minas is currently generating about -0.04 per unit of risk. If you would invest  8,247  in Sempra Energy on September 5, 2024 and sell it today you would earn a total of  903.00  from holding Sempra Energy or generate 10.95% return on investment over 90 days.

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

Sempra Energy  vs.  Energy of Minas

Sempra Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sempra Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Sempra Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Energy of Minas

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sempra Energy and Energy Of

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

The idea behind Sempra Energy and Energy of Minas 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.