Correlation Between Sempra Energy and Engie SA
Can any of the company-specific risk be diversified away by investing in both Sempra Energy and Engie SA 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 Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempra Energy and Engie SA, you can compare the effects of market volatilities on Sempra Energy and Engie SA 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 Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempra Energy and Engie SA.
Diversification Opportunities for Sempra Energy and Engie SA
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sempra and Engie is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sempra Energy and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA 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 Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of Sempra Energy i.e., Sempra Energy and Engie SA go up and down completely randomly.
Pair Corralation between Sempra Energy and Engie SA
Considering the 90-day investment horizon Sempra Energy is expected to generate 0.54 times more return on investment than Engie SA. However, Sempra Energy is 1.84 times less risky than Engie SA. It trades about 0.1 of its potential returns per unit of risk. Engie SA is currently generating about 0.01 per unit of risk. If you would invest 7,293 in Sempra Energy on August 25, 2024 and sell it today you would earn a total of 2,134 from holding Sempra Energy or generate 29.26% 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. Engie SA
Performance |
| Timeline |
| Sempra Energy |
| Engie SA |
Sempra Energy and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempra Energy and Engie SA
The main advantage of trading using opposite Sempra Energy and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra Energy position performs unexpectedly, Engie SA 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 Engie SA will offset losses from the drop in Engie SA'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 Stocks Directory module to find actively traded stocks across global markets.
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