Correlation Between TotalEnergies and Enel SpA
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Enel SpA 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 TotalEnergies and Enel SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies SE and Enel SpA, you can compare the effects of market volatilities on TotalEnergies and Enel SpA 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 TotalEnergies with a short position of Enel SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Enel SpA.
Diversification Opportunities for TotalEnergies and Enel SpA
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TotalEnergies and Enel is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Enel SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel SpA and TotalEnergies 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 TotalEnergies SE are associated (or correlated) with Enel SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel SpA has no effect on the direction of TotalEnergies i.e., TotalEnergies and Enel SpA go up and down completely randomly.
Pair Corralation between TotalEnergies and Enel SpA
Assuming the 90 days trading horizon TotalEnergies SE is expected to under-perform the Enel SpA. In addition to that, TotalEnergies is 1.42 times more volatile than Enel SpA. It trades about -0.08 of its total potential returns per unit of risk. Enel SpA is currently generating about 0.1 per unit of volatility. If you would invest 630.00 in Enel SpA on September 19, 2024 and sell it today you would earn a total of 75.00 from holding Enel SpA or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
TotalEnergies SE vs. Enel SpA
Performance |
| Timeline |
| TotalEnergies SE |
| Enel SpA |
TotalEnergies and Enel SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and Enel SpA
The main advantage of trading using opposite TotalEnergies and Enel SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, Enel SpA 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 Enel SpA will offset losses from the drop in Enel SpA's long position.| TotalEnergies vs. Exxon Mobil | TotalEnergies vs. Superior Plus Corp | TotalEnergies vs. Origin Agritech | TotalEnergies vs. INTUITIVE SURGICAL |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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