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 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
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TotalEnergies and Equinor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE 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 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
Assuming the 90 days horizon TotalEnergies SE is expected to under-perform the Equinor ASA. But the pink sheet apears to be less risky and, when comparing its historical volatility, TotalEnergies SE is 1.75 times less risky than Equinor ASA. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Equinor ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,454 in Equinor ASA on August 23, 2024 and sell it today you would earn a total of 5.00 from holding Equinor ASA or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TotalEnergies SE vs. Equinor ASA
Performance |
| Timeline |
| TotalEnergies SE |
| 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. Eni SpA | TotalEnergies vs. MOL PLC ADR | TotalEnergies vs. PetroChina Co Ltd | TotalEnergies vs. Equinor ASA |
| Equinor ASA vs. Shell PLC ADR | Equinor ASA vs. Equinor ASA ADR | Equinor ASA vs. BP PLC ADR | Equinor ASA vs. Eni SpA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |