Correlation Between TotalEnergies and VANTIVA SA

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

By analyzing existing cross correlation between TotalEnergies EP Gabon and VANTIVA SA, you can compare the effects of market volatilities on TotalEnergies and VANTIVA SA 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 VANTIVA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and VANTIVA SA.

Diversification Opportunities for TotalEnergies and VANTIVA SA

-0.34

Correlation Coefficient

TotalEnergies  VANTIVA SA

Very good diversification

The 3 months correlation between TotalEnergies and VANTIVA is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies EP Gabon and VANTIVA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VANTIVA SA 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 EP Gabon are associated (or correlated) with VANTIVA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VANTIVA SA has no effect on the direction of TotalEnergies i.e., TotalEnergies and VANTIVA SA go up and down completely randomly.

Pair Corralation between TotalEnergies and VANTIVA SA

Assuming the 90 days horizon TotalEnergies EP Gabon is expected to generate 0.69 times more return on investment than VANTIVA SA. However, TotalEnergies EP Gabon is 1.45 times less risky than VANTIVA SA. It trades about 0.15 of its potential returns per unit of risk. VANTIVA SA is currently generating about 0.06 per unit of risk. If you would invest  15,850  in TotalEnergies EP Gabon on September 27, 2024 and sell it today you would earn a total of  3,800  from holding TotalEnergies EP Gabon or generate 23.97% return on investment over 90 days.

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

TotalEnergies EP Gabon  vs.  VANTIVA SA

TotalEnergies EP Gabon

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies EP Gabon are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TotalEnergies sustained solid returns over the last few months and may actually be approaching a breakup point.

VANTIVA SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VANTIVA SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VANTIVA SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TotalEnergies and VANTIVA SA

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

The idea behind TotalEnergies EP Gabon and VANTIVA SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.