Correlation Between Canadian Utilities and Sempra

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Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Sempra 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 Canadian Utilities and Sempra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities and Sempra, you can compare the effects of market volatilities on Canadian Utilities and Sempra 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 Canadian Utilities with a short position of Sempra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Sempra.

Diversification Opportunities for Canadian Utilities and Sempra

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Canadian and Sempra is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities and Sempra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra and Canadian Utilities 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 Canadian Utilities are associated (or correlated) with Sempra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempra has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Sempra go up and down completely randomly.

Pair Corralation between Canadian Utilities and Sempra

Assuming the 90 days horizon Canadian Utilities is expected to generate 15.04 times more return on investment than Sempra. However, Canadian Utilities is 15.04 times more volatile than Sempra. It trades about 0.15 of its potential returns per unit of risk. Sempra is currently generating about -0.12 per unit of risk. If you would invest  1,151  in Canadian Utilities on March 28, 2022 and sell it today you would earn a total of  1,754  from holding Canadian Utilities or generate 152.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Canadian Utilities  vs.  Sempra

 Performance (%) 
      Timeline 
Canadian Utilities 
Canadian Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Utilities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Canadian Utilities exhibited solid returns over the last few months and may actually be approaching a breakup point.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0484
Payout Ratio
1.26
Last Split Factor
2:1
Forward Annual Dividend Rate
1.41
Dividend Date
2022-06-01
Ex Dividend Date
2022-05-04
Last Split Date
2013-06-17

Canadian Price Channel

Sempra 
Sempra Performance
0 of 100
Over the last 90 days Sempra has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0321
Payout Ratio
0.53
Last Split Factor
1385:921
Forward Annual Dividend Rate
4.58
Dividend Date
2022-07-15
Ex Dividend Date
2022-07-06
Last Split Date
1998-06-29

Sempra Price Channel

Canadian Utilities and Sempra Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Canadian Utilities and Sempra

The main advantage of trading using opposite Canadian Utilities and Sempra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Sempra 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 Sempra will offset losses from the drop in Sempra's long position.

Canadian Utilities

Pair trading matchups for Canadian Utilities

The idea behind Canadian Utilities and Sempra pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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