Correlation Between Rolls Royce and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Rolls Royce 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 Rolls Royce and TotalEnergies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rolls Royce Holdings plc and TotalEnergies SE, you can compare the effects of market volatilities on Rolls Royce 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 Rolls Royce with a short position of TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rolls Royce and TotalEnergies.
Diversification Opportunities for Rolls Royce and TotalEnergies
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rolls and TotalEnergies is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Rolls Royce Holdings plc and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE and Rolls Royce 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 Rolls Royce Holdings plc 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 Rolls Royce i.e., Rolls Royce and TotalEnergies go up and down completely randomly.
Pair Corralation between Rolls Royce and TotalEnergies
Assuming the 90 days horizon Rolls Royce Holdings plc is expected to generate 1.37 times more return on investment than TotalEnergies. However, Rolls Royce is 1.37 times more volatile than TotalEnergies SE. It trades about 0.15 of its potential returns per unit of risk. TotalEnergies SE is currently generating about -0.12 per unit of risk. If you would invest 589.00 in Rolls Royce Holdings plc on September 14, 2024 and sell it today you would earn a total of 120.00 from holding Rolls Royce Holdings plc or generate 20.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Rolls Royce Holdings plc vs. TotalEnergies SE
Performance |
Timeline |
Rolls Royce Holdings |
TotalEnergies SE |
Rolls Royce and TotalEnergies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rolls Royce and TotalEnergies
The main advantage of trading using opposite Rolls Royce and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rolls Royce 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.Rolls Royce vs. Austevoll Seafood ASA | Rolls Royce vs. National Beverage Corp | Rolls Royce vs. Dairy Farm International | Rolls Royce vs. INTER CARS SA |
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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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