Correlation Between Sempra Energy and AuraSource
Can any of the company-specific risk be diversified away by investing in both Sempra Energy and AuraSource 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 AuraSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempra Energy and AuraSource, you can compare the effects of market volatilities on Sempra Energy and AuraSource 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 AuraSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempra Energy and AuraSource.
Diversification Opportunities for Sempra Energy and AuraSource
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sempra and AuraSource is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sempra Energy and AuraSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AuraSource 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 AuraSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AuraSource has no effect on the direction of Sempra Energy i.e., Sempra Energy and AuraSource go up and down completely randomly.
Pair Corralation between Sempra Energy and AuraSource
Considering the 90-day investment horizon Sempra Energy is expected to generate 81.18 times less return on investment than AuraSource. But when comparing it to its historical volatility, Sempra Energy is 111.69 times less risky than AuraSource. It trades about 0.27 of its potential returns per unit of risk. AuraSource is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.03 in AuraSource on August 28, 2024 and sell it today you would earn a total of 0.00 from holding AuraSource or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sempra Energy vs. AuraSource
Performance |
| Timeline |
| Sempra Energy |
| AuraSource |
Sempra Energy and AuraSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempra Energy and AuraSource
The main advantage of trading using opposite Sempra Energy and AuraSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra Energy position performs unexpectedly, AuraSource 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 AuraSource will offset losses from the drop in AuraSource's long position.| Sempra Energy vs. Allete Inc | Sempra Energy vs. Avista | Sempra Energy vs. NorthWestern | Sempra Energy vs. The AES |
| AuraSource vs. Energy of Minas | AuraSource vs. Canadian Utilities Limited | AuraSource vs. NorthWestern | AuraSource vs. Allete 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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