Correlation Between TotalEnergies and Exxon
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Exxon 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 Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies SE and Exxon Mobil, you can compare the effects of market volatilities on TotalEnergies and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Exxon.
Diversification Opportunities for TotalEnergies and Exxon
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TotalEnergies and Exxon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of TotalEnergies i.e., TotalEnergies and Exxon go up and down completely randomly.
Pair Corralation between TotalEnergies and Exxon
Assuming the 90 days trading horizon TotalEnergies is expected to generate 7.85 times less return on investment than Exxon. But when comparing it to its historical volatility, TotalEnergies SE is 10.94 times less risky than Exxon. It trades about 0.22 of its potential returns per unit of risk. Exxon Mobil is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 236,633 in Exxon Mobil on August 24, 2024 and sell it today you would earn a total of 13,367 from holding Exxon Mobil or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
TotalEnergies SE vs. Exxon Mobil
Performance |
| Timeline |
| TotalEnergies SE |
| Exxon Mobil |
TotalEnergies and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and Exxon
The main advantage of trading using opposite TotalEnergies and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| TotalEnergies vs. Verizon Communications | TotalEnergies vs. Cognizant Technology Solutions | TotalEnergies vs. Southern Copper | TotalEnergies vs. Hoteles City Express |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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