Correlation Between MOL PLC and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both MOL PLC 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 MOL PLC and TotalEnergies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOL PLC ADR and TotalEnergies SE, you can compare the effects of market volatilities on MOL PLC 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 MOL PLC with a short position of TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOL PLC and TotalEnergies.
Diversification Opportunities for MOL PLC and TotalEnergies
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MOL and TotalEnergies is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MOL PLC ADR and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE and MOL PLC 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 MOL PLC ADR 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 MOL PLC i.e., MOL PLC and TotalEnergies go up and down completely randomly.
Pair Corralation between MOL PLC and TotalEnergies
Assuming the 90 days horizon MOL PLC ADR is expected to generate 0.72 times more return on investment than TotalEnergies. However, MOL PLC ADR is 1.4 times less risky than TotalEnergies. It trades about -0.12 of its potential returns per unit of risk. TotalEnergies SE is currently generating about -0.13 per unit of risk. If you would invest 363.00 in MOL PLC ADR on September 10, 2024 and sell it today you would lose (36.00) from holding MOL PLC ADR or give up 9.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
MOL PLC ADR vs. TotalEnergies SE
Performance |
Timeline |
MOL PLC ADR |
TotalEnergies SE |
MOL PLC and TotalEnergies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MOL PLC and TotalEnergies
The main advantage of trading using opposite MOL PLC and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOL PLC 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 MOL PLC ADR 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.TotalEnergies vs. Eni SpA | TotalEnergies vs. MOL PLC ADR | TotalEnergies vs. PetroChina Co Ltd | TotalEnergies vs. Equinor ASA |
Check out your portfolio center.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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