Correlation Between Engie SA and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Engie SA 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 Engie SA and TotalEnergies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie SA and TotalEnergies SE, you can compare the effects of market volatilities on Engie SA 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 Engie SA with a short position of TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie SA and TotalEnergies.
Diversification Opportunities for Engie SA and TotalEnergies
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Engie and TotalEnergies is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE and Engie SA 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 Engie SA 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 Engie SA i.e., Engie SA and TotalEnergies go up and down completely randomly.
Pair Corralation between Engie SA and TotalEnergies
Assuming the 90 days trading horizon Engie SA is expected to generate 0.48 times more return on investment than TotalEnergies. However, Engie SA is 2.08 times less risky than TotalEnergies. It trades about -0.13 of its potential returns per unit of risk. TotalEnergies SE is currently generating about -0.2 per unit of risk. If you would invest 1,565 in Engie SA on August 26, 2024 and sell it today you would lose (26.00) from holding Engie SA or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engie SA vs. TotalEnergies SE
Performance |
| Timeline |
| Engie SA |
| TotalEnergies SE |
Engie SA and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie SA and TotalEnergies
The main advantage of trading using opposite Engie SA and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie SA 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.| Engie SA vs. Orange SA | Engie SA vs. Veolia Environnement VE | Engie SA vs. AXA SA | Engie SA vs. TotalEnergies SE |
| TotalEnergies vs. Air Liquide SA | TotalEnergies vs. Engie SA | TotalEnergies vs. Sanofi SA | TotalEnergies vs. AXA SA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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