Correlation Between TotalEnergies and Sanofi SA
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Sanofi 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 Sanofi 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 Sanofi SA, you can compare the effects of market volatilities on TotalEnergies and Sanofi 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 Sanofi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Sanofi SA.
Diversification Opportunities for TotalEnergies and Sanofi SA
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TotalEnergies and Sanofi is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Sanofi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi 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 Sanofi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi SA has no effect on the direction of TotalEnergies i.e., TotalEnergies and Sanofi SA go up and down completely randomly.
Pair Corralation between TotalEnergies and Sanofi SA
Assuming the 90 days trading horizon TotalEnergies SE is expected to under-perform the Sanofi SA. In addition to that, TotalEnergies is 1.1 times more volatile than Sanofi SA. It trades about -0.32 of its total potential returns per unit of risk. Sanofi SA is currently generating about -0.3 per unit of volatility. If you would invest 10,004 in Sanofi SA on August 30, 2024 and sell it today you would lose (773.00) from holding Sanofi SA or give up 7.73% 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. Sanofi SA
Performance |
| Timeline |
| TotalEnergies SE |
| Sanofi SA |
TotalEnergies and Sanofi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and Sanofi SA
The main advantage of trading using opposite TotalEnergies and Sanofi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, Sanofi 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 Sanofi SA will offset losses from the drop in Sanofi SA's long position.| TotalEnergies vs. Air Liquide SA | TotalEnergies vs. Engie SA | TotalEnergies vs. Sanofi SA | TotalEnergies vs. AXA SA |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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