Correlation Between TOTAL and Gentex

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

By analyzing existing cross correlation between TOTAL CAPITAL INTERNATIONAL and Gentex, you can compare the effects of market volatilities on TOTAL and Gentex 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 TOTAL with a short position of Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL and Gentex.

Diversification Opportunities for TOTAL and Gentex

-0.39

Correlation Coefficient

TOTAL  Gentex

Very good diversification

The 3 months correlation between TOTAL and Gentex is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL CAPITAL INTERNATIONAL and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex and TOTAL 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 TOTAL CAPITAL INTERNATIONAL are associated (or correlated) with Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of TOTAL i.e., TOTAL and Gentex go up and down completely randomly.

Pair Corralation between TOTAL and Gentex

Assuming the 90 days trading horizon TOTAL CAPITAL INTERNATIONAL is expected to generate 0.87 times more return on investment than Gentex. However, TOTAL CAPITAL INTERNATIONAL is 1.14 times less risky than Gentex. It trades about 0.05 of its potential returns per unit of risk. Gentex is currently generating about 0.01 per unit of risk. If you would invest  7,073  in TOTAL CAPITAL INTERNATIONAL on August 31, 2024 and sell it today you would earn a total of  217.00  from holding TOTAL CAPITAL INTERNATIONAL or generate 3.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.37%
Values	Daily Returns

TOTAL CAPITAL INTERNATIONAL  vs.  Gentex

TOTAL CAPITAL INTERN

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL CAPITAL INTERNATIONAL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TOTAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gentex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Gentex is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TOTAL and Gentex

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

The idea behind TOTAL CAPITAL INTERNATIONAL and Gentex 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.