Correlation Between TotalEnergies and Exxon
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Exxon 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 Exxon 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 Exxon Mobil Corp, you can compare the effects of market volatilities on TotalEnergies and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Exxon.
Diversification Opportunities for TotalEnergies and Exxon
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TotalEnergies and Exxon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE ADR and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of TotalEnergies i.e., TotalEnergies and Exxon go up and down completely randomly.
Pair Corralation between TotalEnergies and Exxon
Considering the 90-day investment horizon TotalEnergies is expected to generate 4.1 times less return on investment than Exxon. But when comparing it to its historical volatility, TotalEnergies SE ADR is 1.02 times less risky than Exxon. It trades about 0.01 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 10,281 in Exxon Mobil Corp on August 29, 2024 and sell it today you would earn a total of 1,516 from holding Exxon Mobil Corp or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TotalEnergies SE ADR vs. Exxon Mobil Corp
Performance |
| Timeline |
| TotalEnergies SE ADR |
| Exxon Mobil Corp |
TotalEnergies and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and Exxon
The main advantage of trading using opposite TotalEnergies and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| TotalEnergies vs. BP PLC ADR | TotalEnergies vs. Chevron Corp | TotalEnergies vs. Exxon Mobil Corp | TotalEnergies vs. Equinor ASA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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