Correlation Between Avista and Sempra Energy
Can any of the company-specific risk be diversified away by investing in both Avista and Sempra Energy 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 Avista and Sempra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avista and Sempra Energy, you can compare the effects of market volatilities on Avista and Sempra Energy 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 Avista with a short position of Sempra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avista and Sempra Energy.
Diversification Opportunities for Avista and Sempra Energy
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avista and Sempra is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Avista and Sempra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra Energy and Avista 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 Avista are associated (or correlated) with Sempra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempra Energy has no effect on the direction of Avista i.e., Avista and Sempra Energy go up and down completely randomly.
Pair Corralation between Avista and Sempra Energy
Considering the 90-day investment horizon Avista is expected to generate 0.84 times more return on investment than Sempra Energy. However, Avista is 1.19 times less risky than Sempra Energy. It trades about 0.02 of its potential returns per unit of risk. Sempra Energy is currently generating about -0.12 per unit of risk. If you would invest 3,635 in Avista on November 2, 2024 and sell it today you would earn a total of 18.00 from holding Avista or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avista vs. Sempra Energy
Performance |
| Timeline |
| Avista |
| Sempra Energy |
Avista and Sempra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avista and Sempra Energy
The main advantage of trading using opposite Avista and Sempra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avista position performs unexpectedly, Sempra Energy 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 Sempra Energy will offset losses from the drop in Sempra Energy's long position.| Avista vs. Allete Inc | Avista vs. Black Hills | Avista vs. Montauk Renewables | Avista vs. Companhia Paranaense de |
| Sempra Energy vs. Allete Inc | Sempra Energy vs. Avista | Sempra Energy vs. NorthWestern | Sempra Energy vs. The AES |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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