Correlation Between Engie SA and Sempra Energy
Can any of the company-specific risk be diversified away by investing in both Engie SA 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 Engie SA and Sempra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie SA ADR and Sempra Energy, you can compare the effects of market volatilities on Engie SA 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 Engie SA with a short position of Sempra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie SA and Sempra Energy.
Diversification Opportunities for Engie SA and Sempra Energy
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Engie and Sempra is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA ADR and Sempra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra Energy and Engie SA 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 Engie SA ADR 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 Engie SA i.e., Engie SA and Sempra Energy go up and down completely randomly.
Pair Corralation between Engie SA and Sempra Energy
Assuming the 90 days horizon Engie SA ADR is expected to under-perform the Sempra Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Engie SA ADR is 2.15 times less risky than Sempra Energy. The pink sheet trades about -0.36 of its potential returns per unit of risk. The Sempra Energy is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 8,517 in Sempra Energy on August 28, 2024 and sell it today you would earn a total of 960.00 from holding Sempra Energy or generate 11.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engie SA ADR vs. Sempra Energy
Performance |
| Timeline |
| Engie SA ADR |
| Sempra Energy |
Engie SA and Sempra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie SA and Sempra Energy
The main advantage of trading using opposite Engie SA and Sempra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie SA 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.| Engie SA vs. TransAlta Corp | Engie SA vs. Pampa Energia SA | Engie SA vs. Vistra Energy Corp | Engie SA vs. NRG Energy |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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