Correlation Between Iberdrola and Sempra

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

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

Diversification Opportunities for Iberdrola and Sempra

-0.44

Correlation Coefficient

Iberdrola  Sempra

Very good diversification

The 3 months correlation between Iberdrola and Sempra is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Iberdrola SA and Sempra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra and Iberdrola 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 Iberdrola SA 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 Iberdrola i.e., Iberdrola and Sempra go up and down completely randomly.

Pair Corralation between Iberdrola and Sempra

Assuming the 90 days trading horizon Iberdrola SA is expected to under-perform the Sempra. In addition to that, Iberdrola is 1.0 times more volatile than Sempra. It trades about -0.02 of its total potential returns per unit of risk. Sempra is currently generating about 0.1 per unit of volatility. If you would invest  6,565  in Sempra on May 6, 2025 and sell it today you would earn a total of  493.00  from holding Sempra or generate 7.51% return on investment over 90 days.

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

Iberdrola SA  vs.  Sempra

Iberdrola SA

Risk-Adjusted Performance

Very Weak

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

Sempra

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sempra are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sempra may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Iberdrola and Sempra

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

The idea behind Iberdrola SA 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.