Correlation Between TOTAL GABON and Kering SA
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON and Kering 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 TOTAL GABON and Kering SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and Kering SA, you can compare the effects of market volatilities on TOTAL GABON and Kering 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 TOTAL GABON with a short position of Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and Kering SA.
Diversification Opportunities for TOTAL GABON and Kering SA
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between TOTAL and Kering is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA and TOTAL GABON 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 TOTAL GABON are associated (or correlated) with Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of TOTAL GABON i.e., TOTAL GABON and Kering SA go up and down completely randomly.
Pair Corralation between TOTAL GABON and Kering SA
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 1.26 times more return on investment than Kering SA. However, TOTAL GABON is 1.26 times more volatile than Kering SA. It trades about 0.19 of its potential returns per unit of risk. Kering SA is currently generating about -0.07 per unit of risk. If you would invest 15,800 in TOTAL GABON on September 3, 2024 and sell it today you would earn a total of 2,600 from holding TOTAL GABON or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. Kering SA
Performance |
| Timeline |
| TOTAL GABON |
| Kering SA |
TOTAL GABON and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and Kering SA
The main advantage of trading using opposite TOTAL GABON and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON position performs unexpectedly, Kering 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 Kering SA will offset losses from the drop in Kering SA's long position.| TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL ENERGY SERVS | TOTAL GABON vs. Anheuser Busch InBev SANV |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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