Correlation Between Christian Dior and TotalEnergies

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

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

Diversification Opportunities for Christian Dior and TotalEnergies

0.49

Correlation Coefficient

Christian Dior  TotalEnergies

Very weak diversification

The 3 months correlation between Christian and TotalEnergies is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE and Christian Dior 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 Christian Dior SE 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 Christian Dior i.e., Christian Dior and TotalEnergies go up and down completely randomly.

Pair Corralation between Christian Dior and TotalEnergies

Assuming the 90 days trading horizon Christian Dior SE is expected to under-perform the TotalEnergies. In addition to that, Christian Dior is 1.82 times more volatile than TotalEnergies SE. It trades about -0.35 of its total potential returns per unit of risk. TotalEnergies SE is currently generating about -0.21 per unit of volatility. If you would invest  5,886  in TotalEnergies SE on December 13, 2024 and sell it today you would lose (223.00) from holding TotalEnergies SE or give up 3.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Christian Dior SE  vs.  TotalEnergies SE

Christian Dior SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Christian Dior SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Christian Dior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TotalEnergies SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, TotalEnergies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Christian Dior and TotalEnergies

The main advantage of trading using opposite Christian Dior and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Christian Dior 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 Christian Dior SE 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.