Correlation Between TotalEnergies and AXA SA
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and AXA SA 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 AXA SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies SE and AXA SA, you can compare the effects of market volatilities on TotalEnergies and AXA SA 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 AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and AXA SA.
Diversification Opportunities for TotalEnergies and AXA SA
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TotalEnergies and AXA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of TotalEnergies i.e., TotalEnergies and AXA SA go up and down completely randomly.
Pair Corralation between TotalEnergies and AXA SA
Assuming the 90 days trading horizon TotalEnergies SE is expected to under-perform the AXA SA. But the stock apears to be less risky and, when comparing its historical volatility, TotalEnergies SE is 1.14 times less risky than AXA SA. The stock trades about -0.19 of its potential returns per unit of risk. The AXA SA is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 3,428 in AXA SA on September 2, 2024 and sell it today you would lose (130.00) from holding AXA SA or give up 3.79% 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. AXA SA
Performance |
| Timeline |
| TotalEnergies SE |
| AXA SA |
TotalEnergies and AXA SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and AXA SA
The main advantage of trading using opposite TotalEnergies and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, AXA SA 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 AXA SA will offset losses from the drop in AXA SA's long position.| TotalEnergies vs. Air Liquide SA | TotalEnergies vs. Engie SA | TotalEnergies vs. Sanofi SA | TotalEnergies vs. AXA SA |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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