Correlation Between Sempra Energy and Atco
Can any of the company-specific risk be diversified away by investing in both Sempra Energy and Atco 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 Atco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempra Energy and Atco, you can compare the effects of market volatilities on Sempra Energy and Atco 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 Atco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempra Energy and Atco.
Diversification Opportunities for Sempra Energy and Atco
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sempra and Atco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sempra Energy and Atco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco 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 Atco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco has no effect on the direction of Sempra Energy i.e., Sempra Energy and Atco go up and down completely randomly.
Pair Corralation between Sempra Energy and Atco
Considering the 90-day investment horizon Sempra Energy is expected to generate 2.08 times more return on investment than Atco. However, Sempra Energy is 2.08 times more volatile than Atco. It trades about 0.27 of its potential returns per unit of risk. Atco is currently generating about -0.01 per unit of risk. 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sempra Energy vs. Atco
Performance |
| Timeline |
| Sempra Energy |
| Atco |
Sempra Energy and Atco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempra Energy and Atco
The main advantage of trading using opposite Sempra Energy and Atco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra Energy position performs unexpectedly, Atco 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 Atco will offset losses from the drop in Atco's long position.| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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