Correlation Between TotalEnergies and IShares Trust
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and IShares Trust 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 IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies SE and iShares Trust , you can compare the effects of market volatilities on TotalEnergies and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and IShares Trust.
Diversification Opportunities for TotalEnergies and IShares Trust
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TotalEnergies and IShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of TotalEnergies i.e., TotalEnergies and IShares Trust go up and down completely randomly.
Pair Corralation between TotalEnergies and IShares Trust
Assuming the 90 days trading horizon TotalEnergies SE is expected to under-perform the IShares Trust. But the stock apears to be less risky and, when comparing its historical volatility, TotalEnergies SE is 1.15 times less risky than IShares Trust. The stock trades about -0.15 of its potential returns per unit of risk. The iShares Trust is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 190,239 in iShares Trust on September 23, 2024 and sell it today you would lose (18,189) from holding iShares Trust or give up 9.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.41% |
Values | Daily Returns |
TotalEnergies SE vs. iShares Trust
Performance |
Timeline |
TotalEnergies SE |
iShares Trust |
TotalEnergies and IShares Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TotalEnergies and IShares Trust
The main advantage of trading using opposite TotalEnergies and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.TotalEnergies vs. Petrleo Brasileiro SA | TotalEnergies vs. iShares Global Timber | TotalEnergies vs. Vanguard World | TotalEnergies vs. iShares Trust |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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