Correlation Between TotalEnergies and Nextedia

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

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

Diversification Opportunities for TotalEnergies and Nextedia

0.58

Correlation Coefficient

TotalEnergies  Nextedia

Very weak diversification

The 3 months correlation between TotalEnergies and Nextedia is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Nextedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextedia 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 Nextedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextedia has no effect on the direction of TotalEnergies i.e., TotalEnergies and Nextedia go up and down completely randomly.

Pair Corralation between TotalEnergies and Nextedia

Assuming the 90 days trading horizon TotalEnergies SE is expected to generate 0.44 times more return on investment than Nextedia. However, TotalEnergies SE is 2.29 times less risky than Nextedia. It trades about 0.26 of its potential returns per unit of risk. Nextedia is currently generating about -0.14 per unit of risk. If you would invest  5,269  in TotalEnergies SE on October 12, 2024 and sell it today you would earn a total of  256.00  from holding TotalEnergies SE or generate 4.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

TotalEnergies SE  vs.  Nextedia

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 weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nextedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextedia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nextedia is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with TotalEnergies and Nextedia

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

The idea behind TotalEnergies SE and Nextedia 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.