Correlation Between TotalEnergies and INTUITIVE SURGICAL

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

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

Diversification Opportunities for TotalEnergies and INTUITIVE SURGICAL

-0.86

Correlation Coefficient

TotalEnergies  INTUITIVE SURGICAL

Pay attention - limited upside

The 3 months correlation between TotalEnergies and INTUITIVE is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL 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 SE are associated (or correlated) with INTUITIVE SURGICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTUITIVE SURGICAL has no effect on the direction of TotalEnergies i.e., TotalEnergies and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between TotalEnergies and INTUITIVE SURGICAL

Assuming the 90 days trading horizon TotalEnergies SE is expected to under-perform the INTUITIVE SURGICAL. But the stock apears to be less risky and, when comparing its historical volatility, TotalEnergies SE is 1.16 times less risky than INTUITIVE SURGICAL. The stock trades about -0.12 of its potential returns per unit of risk. The INTUITIVE SURGICAL is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  44,115  in INTUITIVE SURGICAL on September 14, 2024 and sell it today you would earn a total of  7,205  from holding INTUITIVE SURGICAL or generate 16.33% return on investment over 90 days.

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

TotalEnergies SE  vs.  INTUITIVE SURGICAL

TotalEnergies SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TotalEnergies SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

INTUITIVE SURGICAL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TotalEnergies and INTUITIVE SURGICAL

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

The idea behind TotalEnergies SE and INTUITIVE SURGICAL 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.