Correlation Between Etablissements Maurel and TotalEnergies

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

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

Diversification Opportunities for Etablissements Maurel and TotalEnergies

-0.02

Correlation Coefficient

Etablissements Maurel  TotalEnergies

Good diversification

The 3 months correlation between Etablissements and TotalEnergies is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Etablissements Maurel et and TotalEnergies EP Gabon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies EP Gabon and Etablissements Maurel 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 Etablissements Maurel et 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 EP Gabon has no effect on the direction of Etablissements Maurel i.e., Etablissements Maurel and TotalEnergies go up and down completely randomly.

Pair Corralation between Etablissements Maurel and TotalEnergies

Assuming the 90 days trading horizon Etablissements Maurel is expected to generate 2.69 times less return on investment than TotalEnergies. But when comparing it to its historical volatility, Etablissements Maurel et is 1.29 times less risky than TotalEnergies. It trades about 0.05 of its potential returns per unit of risk. TotalEnergies EP Gabon is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  16,000  in TotalEnergies EP Gabon on September 16, 2024 and sell it today you would earn a total of  2,550  from holding TotalEnergies EP Gabon or generate 15.94% return on investment over 90 days.

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

Etablissements Maurel et  vs.  TotalEnergies EP Gabon

Etablissements Maurel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Etablissements Maurel et are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Etablissements Maurel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TotalEnergies EP Gabon

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies EP Gabon are ranked lower than 8 (%) 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.

Pair Trading with Etablissements Maurel and TotalEnergies

The main advantage of trading using opposite Etablissements Maurel and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etablissements Maurel 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 Etablissements Maurel et and TotalEnergies EP Gabon 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.