Correlation Between Black Hills and TOTAL

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

Diversification Opportunities for Black Hills and TOTAL

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Black and TOTAL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and TOTAL CAPITAL INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL CAPITAL INTERN and Black Hills 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 Black Hills are associated (or correlated) with TOTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL CAPITAL INTERN has no effect on the direction of Black Hills i.e., Black Hills and TOTAL go up and down completely randomly.

Pair Corralation between Black Hills and TOTAL

Considering the 90-day investment horizon Black Hills is expected to generate 775.19 times less return on investment than TOTAL. But when comparing it to its historical volatility, Black Hills is 63.04 times less risky than TOTAL. It trades about 0.01 of its potential returns per unit of risk. TOTAL CAPITAL INTERNATIONAL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,657  in TOTAL CAPITAL INTERNATIONAL on August 30, 2024 and sell it today you would lose (367.00) from holding TOTAL CAPITAL INTERNATIONAL or give up 4.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy79.84%
ValuesDaily Returns

Black Hills  vs.  TOTAL CAPITAL INTERNATIONAL

 Performance 
       Timeline  
Black Hills 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward-looking signals, Black Hills may actually be approaching a critical reversion point that can send shares even higher in December 2024.
TOTAL CAPITAL INTERN 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL CAPITAL INTERNATIONAL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TOTAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Black Hills and TOTAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Black Hills and TOTAL

The main advantage of trading using opposite Black Hills and TOTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, TOTAL 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 TOTAL will offset losses from the drop in TOTAL's long position.
The idea behind Black Hills and TOTAL CAPITAL INTERNATIONAL 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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