Correlation Between Gallant Venture and Sempra Energy

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

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

Diversification Opportunities for Gallant Venture and Sempra Energy

0.0

Correlation Coefficient

Gallant Venture  Sempra Energy

Pay attention - limited upside

The 3 months correlation between Gallant and Sempra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gallant Venture and Sempra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra Energy and Gallant Venture 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 Gallant Venture 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 Gallant Venture i.e., Gallant Venture and Sempra Energy go up and down completely randomly.

Pair Corralation between Gallant Venture and Sempra Energy

If you would invest  7,077  in Sempra Energy on February 6, 2024 and sell it today you would earn a total of  215.00  from holding Sempra Energy or generate 3.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Gallant Venture  vs.  Sempra Energy

Gallant Venture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gallant Venture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gallant Venture is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sempra Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sempra Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Gallant Venture and Sempra Energy

The main advantage of trading using opposite Gallant Venture and Sempra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gallant Venture 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 Gallant Venture 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.