Correlation Between Sempra Energy and SSE PLC
Can any of the company-specific risk be diversified away by investing in both Sempra Energy and SSE PLC 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 SSE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempra Energy and SSE PLC ADR, you can compare the effects of market volatilities on Sempra Energy and SSE PLC 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 SSE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempra Energy and SSE PLC.
Diversification Opportunities for Sempra Energy and SSE PLC
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sempra and SSE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sempra Energy and SSE PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSE PLC ADR 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 SSE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSE PLC ADR has no effect on the direction of Sempra Energy i.e., Sempra Energy and SSE PLC go up and down completely randomly.
Pair Corralation between Sempra Energy and SSE PLC
Considering the 90-day investment horizon Sempra Energy is expected to under-perform the SSE PLC. In addition to that, Sempra Energy is 1.03 times more volatile than SSE PLC ADR. It trades about -0.08 of its total potential returns per unit of risk. SSE PLC ADR is currently generating about 0.17 per unit of volatility. If you would invest 1,931 in SSE PLC ADR on January 6, 2025 and sell it today you would earn a total of 147.00 from holding SSE PLC ADR or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sempra Energy vs. SSE PLC ADR
Performance |
| Timeline |
| Sempra Energy |
| SSE PLC ADR |
Sempra Energy and SSE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempra Energy and SSE PLC
The main advantage of trading using opposite Sempra Energy and SSE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra Energy position performs unexpectedly, SSE PLC 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 SSE PLC will offset losses from the drop in SSE PLC's long position.| Sempra Energy vs. Allete Inc | Sempra Energy vs. Avista | Sempra Energy vs. NorthWestern | Sempra Energy vs. The AES |
| SSE PLC vs. ENEL Societa per | SSE PLC vs. Allete Inc | SSE PLC vs. Companhia Energetica de | SSE PLC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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