Correlation Between TotalEnergies and Financiere Moncey
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Financiere Moncey 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 Financiere Moncey 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 Financiere Moncey SA, you can compare the effects of market volatilities on TotalEnergies and Financiere Moncey 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 Financiere Moncey. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Financiere Moncey.
Diversification Opportunities for TotalEnergies and Financiere Moncey
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TotalEnergies and Financiere is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies EP Gabon and Financiere Moncey SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financiere Moncey 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 Financiere Moncey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financiere Moncey has no effect on the direction of TotalEnergies i.e., TotalEnergies and Financiere Moncey go up and down completely randomly.
Pair Corralation between TotalEnergies and Financiere Moncey
Assuming the 90 days horizon TotalEnergies is expected to generate 2.11 times less return on investment than Financiere Moncey. But when comparing it to its historical volatility, TotalEnergies EP Gabon is 1.45 times less risky than Financiere Moncey. It trades about 0.24 of its potential returns per unit of risk. Financiere Moncey SA is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 12,100 in Financiere Moncey SA on September 28, 2024 and sell it today you would earn a total of 1,784 from holding Financiere Moncey SA or generate 14.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
TotalEnergies EP Gabon vs. Financiere Moncey SA
Performance |
| Timeline |
| TotalEnergies EP Gabon |
| Financiere Moncey |
TotalEnergies and Financiere Moncey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and Financiere Moncey
The main advantage of trading using opposite TotalEnergies and Financiere Moncey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, Financiere Moncey 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 Financiere Moncey will offset losses from the drop in Financiere Moncey's long position.| TotalEnergies vs. Vallourec | TotalEnergies vs. Eramet SA | TotalEnergies vs. Soitec SA | TotalEnergies vs. Nexans SA |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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