Correlation Between Agilent Technologies and TotalEnergies

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

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

Diversification Opportunities for Agilent Technologies and TotalEnergies

0.09

Correlation Coefficient

Agilent Technologies  TotalEnergies

Significant diversification

The 3 months correlation between Agilent and TotalEnergies is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE and Agilent Technologies 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 Agilent Technologies 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 Agilent Technologies i.e., Agilent Technologies and TotalEnergies go up and down completely randomly.

Pair Corralation between Agilent Technologies and TotalEnergies

Assuming the 90 days horizon Agilent Technologies is expected to generate 1.0 times less return on investment than TotalEnergies. But when comparing it to its historical volatility, Agilent Technologies is 1.43 times less risky than TotalEnergies. It trades about 0.55 of its potential returns per unit of risk. TotalEnergies SE is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  5,073  in TotalEnergies SE on October 23, 2024 and sell it today you would earn a total of  577.00  from holding TotalEnergies SE or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Agilent Technologies  vs.  TotalEnergies SE

Agilent Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Agilent Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

TotalEnergies SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TotalEnergies SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TotalEnergies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Agilent Technologies and TotalEnergies

The main advantage of trading using opposite Agilent Technologies and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies 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 Agilent Technologies 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 Transaction History module to view history of all your transactions and understand their impact on performance.