Correlation Between O I and Sempra Energy

Can any of the company-specific risk be diversified away by investing in both O I and Sempra Energy 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 O I and Sempra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between O I Glass and Sempra Energy, you can compare the effects of market volatilities on O I and Sempra Energy 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 O I with a short position of Sempra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of O I and Sempra Energy.

Diversification Opportunities for O I and Sempra Energy

-0.13

Correlation Coefficient

O I  Sempra Energy

Good diversification

The 3 months correlation between O I and Sempra is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding O I Glass and Sempra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra Energy and O I 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 O I Glass are associated (or correlated) with Sempra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempra Energy has no effect on the direction of O I i.e., O I and Sempra Energy go up and down completely randomly.

Pair Corralation between O I and Sempra Energy

Allowing for the 90-day total investment horizon O I Glass is expected to generate 2.0 times more return on investment than Sempra Energy. However, O I is 2.0 times more volatile than Sempra Energy. It trades about 0.02 of its potential returns per unit of risk. Sempra Energy is currently generating about -0.01 per unit of risk. If you would invest  1,343  in O I Glass on January 17, 2024 and sell it today you would earn a total of  188.00  from holding O I Glass or generate 14.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

O I Glass  vs.  Sempra Energy

O I Glass

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in O I Glass are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, O I may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Sempra Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sempra Energy 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.

Pair Trading with O I and Sempra Energy

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

The idea behind O I Glass and Sempra Energy 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.