Correlation Between Sempra Energy and First National
Can any of the company-specific risk be diversified away by investing in both Sempra Energy and First National 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 First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempra Energy and First National Energy, you can compare the effects of market volatilities on Sempra Energy and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempra Energy and First National.
Diversification Opportunities for Sempra Energy and First National
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sempra and First is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sempra Energy and First National Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Energy 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Energy has no effect on the direction of Sempra Energy i.e., Sempra Energy and First National go up and down completely randomly.
Pair Corralation between Sempra Energy and First National
Considering the 90-day investment horizon Sempra Energy is expected to generate 0.08 times more return on investment than First National. However, Sempra Energy is 11.81 times less risky than First National. It trades about 0.13 of its potential returns per unit of risk. First National Energy is currently generating about 0.0 per unit of risk. If you would invest 8,278 in Sempra Energy on September 4, 2024 and sell it today you would earn a total of 932.00 from holding Sempra Energy or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Sempra Energy vs. First National Energy
Performance |
| Timeline |
| Sempra Energy |
| First National Energy |
Sempra Energy and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempra Energy and First National
The main advantage of trading using opposite Sempra Energy and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra Energy position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| Sempra Energy vs. Allete Inc | Sempra Energy vs. Avista | Sempra Energy vs. NorthWestern | Sempra Energy vs. The AES |
| First National vs. Energy of Minas | First National vs. The AES | First National vs. Sempra Energy | First National vs. Iberdrola SA |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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