Correlation Between Sempra Energy and AES Corp
Can any of the company-specific risk be diversified away by investing in both Sempra Energy and AES Corp 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 AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempra Energy and AES Corp Unit, you can compare the effects of market volatilities on Sempra Energy and AES Corp 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 AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempra Energy and AES Corp.
Diversification Opportunities for Sempra Energy and AES Corp
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sempra and AES is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sempra Energy and AES Corp Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp Unit 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 AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp Unit has no effect on the direction of Sempra Energy i.e., Sempra Energy and AES Corp go up and down completely randomly.
Pair Corralation between Sempra Energy and AES Corp
If you would invest 7,116 in Sempra Energy on August 24, 2024 and sell it today you would earn a total of 2,353 from holding Sempra Energy or generate 33.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Sempra Energy vs. AES Corp Unit
Performance |
| Timeline |
| Sempra Energy |
| AES Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sempra Energy and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempra Energy and AES Corp
The main advantage of trading using opposite Sempra Energy and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra Energy position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.| Sempra Energy vs. Allete Inc | Sempra Energy vs. Avista | Sempra Energy vs. NorthWestern | Sempra Energy vs. The AES |
| AES Corp vs. The Cheesecake Factory | AES Corp vs. Dave Busters Entertainment | AES Corp vs. Omni Health | AES Corp vs. Amgen Inc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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