Correlation Between TotalEnergies and AB Science
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and AB Science 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 AB Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies SE and AB Science SA, you can compare the effects of market volatilities on TotalEnergies and AB Science 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 AB Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and AB Science.
Diversification Opportunities for TotalEnergies and AB Science
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TotalEnergies and AB Science is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and AB Science SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Science SA 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 AB Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Science SA has no effect on the direction of TotalEnergies i.e., TotalEnergies and AB Science go up and down completely randomly.
Pair Corralation between TotalEnergies and AB Science
Assuming the 90 days trading horizon TotalEnergies SE is expected to generate 0.62 times more return on investment than AB Science. However, TotalEnergies SE is 1.62 times less risky than AB Science. It trades about -0.12 of its potential returns per unit of risk. AB Science SA is currently generating about -0.18 per unit of risk. If you would invest 6,169 in TotalEnergies SE on September 2, 2024 and sell it today you would lose (672.00) from holding TotalEnergies SE or give up 10.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TotalEnergies SE vs. AB Science SA
Performance |
| Timeline |
| TotalEnergies SE |
| AB Science SA |
TotalEnergies and AB Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and AB Science
The main advantage of trading using opposite TotalEnergies and AB Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, AB Science 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 AB Science will offset losses from the drop in AB Science's long position.| TotalEnergies vs. Air Liquide SA | TotalEnergies vs. Engie SA | TotalEnergies vs. Sanofi SA | TotalEnergies vs. AXA SA |
| AB Science vs. Virbac SA | AB Science vs. Bonduelle SCA | AB Science vs. Biomerieux SA | AB Science vs. Guerbet S A |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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