Correlation Between Sempra Energy and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Sempra Energy and Newpark Resources 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 Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempra Energy and Newpark Resources, you can compare the effects of market volatilities on Sempra Energy and Newpark Resources 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 Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempra Energy and Newpark Resources.
Diversification Opportunities for Sempra Energy and Newpark Resources
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sempra and Newpark is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sempra Energy and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources 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 Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of Sempra Energy i.e., Sempra Energy and Newpark Resources go up and down completely randomly.
Pair Corralation between Sempra Energy and Newpark Resources
Considering the 90-day investment horizon Sempra Energy is expected to generate 0.89 times more return on investment than Newpark Resources. However, Sempra Energy is 1.13 times less risky than Newpark Resources. It trades about 0.14 of its potential returns per unit of risk. Newpark Resources is currently generating about 0.05 per unit of risk. If you would invest 6,924 in Sempra Energy on January 26, 2024 and sell it today you would earn a total of 280.00 from holding Sempra Energy or generate 4.04% 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. Newpark Resources
Performance |
| Timeline |
| Sempra Energy |
| Newpark Resources |
Sempra Energy and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempra Energy and Newpark Resources
The main advantage of trading using opposite Sempra Energy and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra Energy position performs unexpectedly, Newpark Resources 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 Newpark Resources will offset losses from the drop in Newpark Resources' long position.| Sempra Energy vs. Allete Inc | Sempra Energy vs. Avista | Sempra Energy vs. NorthWestern | Sempra Energy vs. The AES |
| Newpark Resources vs. Expro Group Holdings | Newpark Resources vs. Ranger Energy Services | Newpark Resources vs. MRC Global | Newpark Resources vs. Now 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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