Correlation Between TotalEnergies and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Equinor ASA 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 Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies SE ADR and Equinor ASA, you can compare the effects of market volatilities on TotalEnergies and Equinor ASA 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 Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Equinor ASA.
Diversification Opportunities for TotalEnergies and Equinor ASA
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TotalEnergies and Equinor is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE ADR and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA 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 ADR are associated (or correlated) with Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of TotalEnergies i.e., TotalEnergies and Equinor ASA go up and down completely randomly.
Pair Corralation between TotalEnergies and Equinor ASA
Considering the 90-day investment horizon TotalEnergies SE ADR is expected to under-perform the Equinor ASA. But the stock apears to be less risky and, when comparing its historical volatility, TotalEnergies SE ADR is 2.19 times less risky than Equinor ASA. The stock trades about -0.39 of its potential returns per unit of risk. The Equinor ASA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,352 in Equinor ASA on August 28, 2024 and sell it today you would earn a total of 133.00 from holding Equinor ASA or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TotalEnergies SE ADR vs. Equinor ASA
Performance |
| Timeline |
| TotalEnergies SE ADR |
| Equinor ASA |
TotalEnergies and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and Equinor ASA
The main advantage of trading using opposite TotalEnergies and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| TotalEnergies vs. BP PLC ADR | TotalEnergies vs. Chevron Corp | TotalEnergies vs. Exxon Mobil Corp | TotalEnergies vs. Equinor ASA ADR |
| Equinor ASA vs. China Petroleum Chemical | Equinor ASA vs. Galp Energa | Equinor ASA vs. Exxon Mobil Corp | Equinor ASA vs. MOL PLC ADR |
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.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |