Correlation Between Sumo Resources and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Sumo Resources 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 Sumo Resources and TotalEnergies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumo Resources PLC and TotalEnergies EP Gabon, you can compare the effects of market volatilities on Sumo Resources 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 Sumo Resources with a short position of TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumo Resources and TotalEnergies.
Diversification Opportunities for Sumo Resources and TotalEnergies
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sumo and TotalEnergies is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sumo Resources PLC and TotalEnergies EP Gabon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies EP Gabon and Sumo Resources 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 Sumo Resources PLC 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 EP Gabon has no effect on the direction of Sumo Resources i.e., Sumo Resources and TotalEnergies go up and down completely randomly.
Pair Corralation between Sumo Resources and TotalEnergies
Assuming the 90 days trading horizon Sumo Resources PLC is expected to generate 9.54 times more return on investment than TotalEnergies. However, Sumo Resources is 9.54 times more volatile than TotalEnergies EP Gabon. It trades about 0.08 of its potential returns per unit of risk. TotalEnergies EP Gabon is currently generating about 0.09 per unit of risk. If you would invest 0.55 in Sumo Resources PLC on September 4, 2024 and sell it today you would lose (0.10) from holding Sumo Resources PLC or give up 18.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Sumo Resources PLC vs. TotalEnergies EP Gabon
Performance |
| Timeline |
| Sumo Resources PLC |
| TotalEnergies EP Gabon |
Sumo Resources and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumo Resources and TotalEnergies
The main advantage of trading using opposite Sumo Resources and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumo Resources 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.| Sumo Resources vs. TotalEnergies EP Gabon | Sumo Resources vs. Robertet SA | Sumo Resources vs. EPC Groupe | Sumo Resources vs. Manitou BF SA |
| TotalEnergies vs. Vallourec | TotalEnergies vs. Eramet SA | TotalEnergies vs. Soitec SA | TotalEnergies vs. Manitou BF 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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