Correlation Between Total Energy and IShares SPTSX
Can any of the company-specific risk be diversified away by investing in both Total Energy and IShares SPTSX 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 Energy and IShares SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Energy Services and iShares SPTSX Capped, you can compare the effects of market volatilities on Total Energy and IShares SPTSX 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 Energy with a short position of IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Energy and IShares SPTSX.
Diversification Opportunities for Total Energy and IShares SPTSX
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Total and IShares is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Total Energy Services and iShares SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX Capped and Total Energy 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 Energy Services are associated (or correlated) with IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX Capped has no effect on the direction of Total Energy i.e., Total Energy and IShares SPTSX go up and down completely randomly.
Pair Corralation between Total Energy and IShares SPTSX
Assuming the 90 days trading horizon Total Energy Services is expected to generate 1.27 times more return on investment than IShares SPTSX. However, Total Energy is 1.27 times more volatile than iShares SPTSX Capped. It trades about 0.55 of its potential returns per unit of risk. iShares SPTSX Capped is currently generating about 0.07 per unit of risk. If you would invest 965.00 in Total Energy Services on August 30, 2024 and sell it today you would earn a total of 206.00 from holding Total Energy Services or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Total Energy Services vs. iShares SPTSX Capped
Performance |
| Timeline |
| Total Energy Services |
| iShares SPTSX Capped |
Total Energy and IShares SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Energy and IShares SPTSX
The main advantage of trading using opposite Total Energy and IShares SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Energy position performs unexpectedly, IShares SPTSX 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 IShares SPTSX will offset losses from the drop in IShares SPTSX's long position.| Total Energy vs. PHX Energy Services | Total Energy vs. Pason Systems | Total Energy vs. CES Energy Solutions | Total Energy vs. Western Energy Services |
| IShares SPTSX vs. BMO Equal Weight | IShares SPTSX vs. BMO SPTSX Equal | IShares SPTSX vs. BMO Equal Weight | IShares SPTSX vs. BMO Equal Weight |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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