Correlation Between Chevron and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Chevron and TotalEnergies 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 Chevron and TotalEnergies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron and TotalEnergies SE, you can compare the effects of market volatilities on Chevron and TotalEnergies 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 Chevron with a short position of TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron and TotalEnergies.
Diversification Opportunities for Chevron and TotalEnergies
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chevron and TotalEnergies is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chevron and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE and Chevron 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 Chevron are associated (or correlated) with TotalEnergies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TotalEnergies SE has no effect on the direction of Chevron i.e., Chevron and TotalEnergies go up and down completely randomly.
Pair Corralation between Chevron and TotalEnergies
Assuming the 90 days trading horizon Chevron is expected to generate 5.73 times less return on investment than TotalEnergies. But when comparing it to its historical volatility, Chevron is 1.24 times less risky than TotalEnergies. It trades about 0.03 of its potential returns per unit of risk. TotalEnergies SE is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,550 in TotalEnergies SE on November 28, 2024 and sell it today you would earn a total of 250.00 from holding TotalEnergies SE or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron vs. TotalEnergies SE
Performance |
| Timeline |
| Chevron |
| TotalEnergies SE |
Chevron and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron and TotalEnergies
The main advantage of trading using opposite Chevron and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron position performs unexpectedly, TotalEnergies 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 TotalEnergies will offset losses from the drop in TotalEnergies' long position.| Chevron vs. Siamgas And Petrochemicals | Chevron vs. SILICON LABORATOR | Chevron vs. Sanyo Chemical Industries | Chevron vs. Silicon Motion Technology |
| TotalEnergies vs. SEKISUI CHEMICAL | TotalEnergies vs. SILICON LABORATOR | TotalEnergies vs. MICRONIC MYDATA | TotalEnergies vs. STORAGEVAULT CANADA INC |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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