Correlation Between NYSE Composite and Sempra Energy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Sempra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Sempra Energy, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Sempra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Sempra Energy.
Diversification Opportunities for NYSE Composite and Sempra Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Sempra is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Sempra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra Energy and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Sempra Energy go up and down completely randomly.
Pair Corralation between NYSE Composite and Sempra Energy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.61 times more return on investment than Sempra Energy. However, NYSE Composite is 1.64 times less risky than Sempra Energy. It trades about 0.08 of its potential returns per unit of risk. Sempra Energy is currently generating about 0.04 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Sempra Energy
Performance |
| Timeline |
NYSE Composite and Sempra Energy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Sempra Energy
Pair trading matchups for Sempra Energy
Pair Trading with NYSE Composite and Sempra Energy
The main advantage of trading using opposite NYSE Composite and Sempra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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