Correlation Between Vitec Software and TotalEnergies

Can any of the company-specific risk be diversified away by investing in both Vitec Software and TotalEnergies 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 Vitec Software and TotalEnergies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vitec Software Group and TotalEnergies SE, you can compare the effects of market volatilities on Vitec Software and TotalEnergies 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 Vitec Software with a short position of TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and TotalEnergies.

Diversification Opportunities for Vitec Software and TotalEnergies

0.68

Correlation Coefficient

Vitec Software  TotalEnergies

Poor diversification

The 3 months correlation between Vitec and TotalEnergies is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE and Vitec Software 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 Vitec Software Group are associated (or correlated) with TotalEnergies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TotalEnergies SE has no effect on the direction of Vitec Software i.e., Vitec Software and TotalEnergies go up and down completely randomly.

Pair Corralation between Vitec Software and TotalEnergies

Assuming the 90 days trading horizon Vitec Software is expected to generate 2.24 times less return on investment than TotalEnergies. But when comparing it to its historical volatility, Vitec Software Group is 1.15 times less risky than TotalEnergies. It trades about 0.06 of its potential returns per unit of risk. TotalEnergies SE is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,187  in TotalEnergies SE on December 25, 2024 and sell it today you would earn a total of  733.00  from holding TotalEnergies SE or generate 14.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Vitec Software Group  vs.  TotalEnergies SE

Vitec Software Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vitec Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TotalEnergies SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, TotalEnergies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vitec Software and TotalEnergies

The main advantage of trading using opposite Vitec Software and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software position performs unexpectedly, TotalEnergies 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 TotalEnergies will offset losses from the drop in TotalEnergies' long position.

The idea behind Vitec Software Group and TotalEnergies SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.