Correlation Between TotalEnergies and Compagnie Generale
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Compagnie Generale 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 Compagnie Generale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies SE and Compagnie Generale des, you can compare the effects of market volatilities on TotalEnergies and Compagnie Generale 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 Compagnie Generale. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Compagnie Generale.
Diversification Opportunities for TotalEnergies and Compagnie Generale
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TotalEnergies and Compagnie is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Compagnie Generale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Generale des 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 Compagnie Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Generale des has no effect on the direction of TotalEnergies i.e., TotalEnergies and Compagnie Generale go up and down completely randomly.
Pair Corralation between TotalEnergies and Compagnie Generale
Assuming the 90 days trading horizon TotalEnergies SE is expected to under-perform the Compagnie Generale. In addition to that, TotalEnergies is 1.32 times more volatile than Compagnie Generale des. It trades about -0.29 of its total potential returns per unit of risk. Compagnie Generale des is currently generating about -0.07 per unit of volatility. If you would invest 3,164 in Compagnie Generale des on August 28, 2024 and sell it today you would lose (47.00) from holding Compagnie Generale des or give up 1.49% 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. Compagnie Generale des
Performance |
| Timeline |
| TotalEnergies SE |
| Compagnie Generale des |
TotalEnergies and Compagnie Generale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and Compagnie Generale
The main advantage of trading using opposite TotalEnergies and Compagnie Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, Compagnie Generale 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 Compagnie Generale will offset losses from the drop in Compagnie Generale'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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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