Correlation Between Equinor ASA and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Equinor ASA 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 Equinor ASA and TotalEnergies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and TotalEnergies SE, you can compare the effects of market volatilities on Equinor ASA 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 Equinor ASA with a short position of TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and TotalEnergies.
Diversification Opportunities for Equinor ASA and TotalEnergies
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Equinor and TotalEnergies is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE and Equinor ASA 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 Equinor ASA 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 Equinor ASA i.e., Equinor ASA and TotalEnergies go up and down completely randomly.
Pair Corralation between Equinor ASA and TotalEnergies
Assuming the 90 days horizon Equinor ASA is expected to generate 1.37 times less return on investment than TotalEnergies. In addition to that, Equinor ASA is 1.5 times more volatile than TotalEnergies SE. It trades about 0.22 of its total potential returns per unit of risk. TotalEnergies SE is currently generating about 0.46 per unit of volatility. If you would invest 5,268 in TotalEnergies SE on October 24, 2024 and sell it today you would earn a total of 618.00 from holding TotalEnergies SE or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA vs. TotalEnergies SE
Performance |
| Timeline |
| Equinor ASA |
| TotalEnergies SE |
Equinor ASA and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and TotalEnergies
The main advantage of trading using opposite Equinor ASA and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA 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.| Equinor ASA vs. China Petroleum Chemical | Equinor ASA vs. Galp Energa | Equinor ASA vs. Exxon Mobil Corp | Equinor ASA vs. Eni SpA |
| TotalEnergies vs. Eni SpA | TotalEnergies vs. MOL PLC ADR | TotalEnergies vs. PetroChina Co Ltd | TotalEnergies vs. Equinor ASA |
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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