Correlation Between TotalEnergies and FIPP SA

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

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

Diversification Opportunities for TotalEnergies and FIPP SA

0.05

Correlation Coefficient

TotalEnergies  FIPP SA

Significant diversification

The 3 months correlation between TotalEnergies and FIPP is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and FIPP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIPP SA 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 FIPP SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIPP SA has no effect on the direction of TotalEnergies i.e., TotalEnergies and FIPP SA go up and down completely randomly.

Pair Corralation between TotalEnergies and FIPP SA

Assuming the 90 days trading horizon TotalEnergies SE is expected to under-perform the FIPP SA. But the stock apears to be less risky and, when comparing its historical volatility, TotalEnergies SE is 7.54 times less risky than FIPP SA. The stock trades about -0.33 of its potential returns per unit of risk. The FIPP SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  14.00  in FIPP SA on September 24, 2024 and sell it today you would earn a total of  0.00  from holding FIPP SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

TotalEnergies SE  vs.  FIPP SA

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FIPP SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FIPP SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FIPP SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TotalEnergies and FIPP SA

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

The idea behind TotalEnergies SE and FIPP SA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.