Correlation Between Sempra Energy and Fidelity Advisor

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

Diversification Opportunities for Sempra Energy and Fidelity Advisor

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Sempra and Fidelity is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sempra Energy and FIDELITY ADVISOR STOCK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Stock 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 Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Stock has no effect on the direction of Sempra Energy i.e., Sempra Energy and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Sempra Energy and Fidelity Advisor

Considering the 90-day investment horizon Sempra Energy is expected to generate 3.63 times less return on investment than Fidelity Advisor. In addition to that, Sempra Energy is 1.63 times more volatile than Fidelity Advisor Stock. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Advisor Stock is currently generating about 0.31 per unit of volatility. If you would invest  3,978  in Fidelity Advisor Stock on December 29, 2023 and sell it today you would earn a total of  194.00  from holding Fidelity Advisor Stock or generate 4.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Sempra Energy  vs.  FIDELITY ADVISOR STOCK

 Performance 
       Timeline  
Sempra Energy 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 rather sound basic indicators, Sempra Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Fidelity Advisor Stock 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Stock are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile fundamental indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Sempra Energy and Fidelity Advisor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sempra Energy and Fidelity Advisor

The main advantage of trading using opposite Sempra Energy and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra Energy position performs unexpectedly, Fidelity Advisor 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 Fidelity Advisor will offset losses from the drop in Fidelity Advisor's long position.
The idea behind Sempra Energy and Fidelity Advisor Stock 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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