Correlation Between TotalEnergies and Lectricite

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

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

Diversification Opportunities for TotalEnergies and Lectricite

0.86

Correlation Coefficient

TotalEnergies  Lectricite

Very poor diversification

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

Pair Corralation between TotalEnergies and Lectricite

Assuming the 90 days trading horizon TotalEnergies is expected to generate 2.64 times less return on investment than Lectricite. But when comparing it to its historical volatility, TotalEnergies SE is 1.34 times less risky than Lectricite. It trades about 0.16 of its potential returns per unit of risk. lectricite de Strasbourg is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  11,050  in lectricite de Strasbourg on December 1, 2024 and sell it today you would earn a total of  2,850  from holding lectricite de Strasbourg or generate 25.79% return on investment over 90 days.

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

TotalEnergies SE  vs.  lectricite de Strasbourg

TotalEnergies SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, TotalEnergies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

lectricite de Strasbourg

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in lectricite de Strasbourg are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lectricite sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TotalEnergies and Lectricite

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

The idea behind TotalEnergies SE and lectricite de Strasbourg 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.