Correlation Between GM and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and TotalEnergies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and TotalEnergies SE ADR, you can compare the effects of market volatilities on GM 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 GM with a short position of TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and TotalEnergies.
Diversification Opportunities for GM and TotalEnergies
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and TotalEnergies is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and TotalEnergies SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE ADR and GM 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 General Motors 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 ADR has no effect on the direction of GM i.e., GM and TotalEnergies go up and down completely randomly.
Pair Corralation between GM and TotalEnergies
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.69 times more return on investment than TotalEnergies. However, GM is 1.69 times more volatile than TotalEnergies SE ADR. It trades about 0.28 of its potential returns per unit of risk. TotalEnergies SE ADR is currently generating about -0.33 per unit of risk. If you would invest 5,207 in General Motors on August 26, 2024 and sell it today you would earn a total of 646.00 from holding General Motors or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. TotalEnergies SE ADR
Performance |
| Timeline |
| General Motors |
| TotalEnergies SE ADR |
GM and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and TotalEnergies
The main advantage of trading using opposite GM and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and TotalEnergies SE ADR 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.| TotalEnergies vs. BP PLC ADR | TotalEnergies vs. Chevron Corp | TotalEnergies vs. Exxon Mobil Corp | TotalEnergies vs. Equinor ASA ADR |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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