Correlation Between TotalEnergies and Neolife SA
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Neolife SA 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 TotalEnergies and Neolife SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies EP Gabon and Neolife SA, you can compare the effects of market volatilities on TotalEnergies and Neolife SA 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 TotalEnergies with a short position of Neolife SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Neolife SA.
Diversification Opportunities for TotalEnergies and Neolife SA
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TotalEnergies and Neolife is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies EP Gabon and Neolife SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neolife SA and TotalEnergies 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 TotalEnergies EP Gabon are associated (or correlated) with Neolife SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neolife SA has no effect on the direction of TotalEnergies i.e., TotalEnergies and Neolife SA go up and down completely randomly.
Pair Corralation between TotalEnergies and Neolife SA
Assuming the 90 days horizon TotalEnergies EP Gabon is expected to generate 0.36 times more return on investment than Neolife SA. However, TotalEnergies EP Gabon is 2.75 times less risky than Neolife SA. It trades about 0.08 of its potential returns per unit of risk. Neolife SA is currently generating about 0.03 per unit of risk. If you would invest 8,545 in TotalEnergies EP Gabon on November 9, 2024 and sell it today you would earn a total of 8,405 from holding TotalEnergies EP Gabon or generate 98.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TotalEnergies EP Gabon vs. Neolife SA
Performance |
| Timeline |
| TotalEnergies EP Gabon |
| Neolife SA |
TotalEnergies and Neolife SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and Neolife SA
The main advantage of trading using opposite TotalEnergies and Neolife SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, Neolife SA 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 Neolife SA will offset losses from the drop in Neolife SA's long position.| TotalEnergies vs. Etablissements Maurel et | TotalEnergies vs. Esso SAF | TotalEnergies vs. Mtropole Tlvision SA | TotalEnergies vs. Rubis SCA |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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