Correlation Between TotalEnergies and Airbus Group

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

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

Diversification Opportunities for TotalEnergies and Airbus Group

0.59

Correlation Coefficient

TotalEnergies  Airbus Group

Very weak diversification

The 3 months correlation between TotalEnergies and Airbus is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies EP Gabon and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE 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 EP Gabon are associated (or correlated) with Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of TotalEnergies i.e., TotalEnergies and Airbus Group go up and down completely randomly.

Pair Corralation between TotalEnergies and Airbus Group

Assuming the 90 days horizon TotalEnergies EP Gabon is expected to generate 0.69 times more return on investment than Airbus Group. However, TotalEnergies EP Gabon is 1.45 times less risky than Airbus Group. It trades about 0.26 of its potential returns per unit of risk. Airbus Group SE is currently generating about -0.01 per unit of risk. If you would invest  16,800  in TotalEnergies EP Gabon on February 21, 2024 and sell it today you would earn a total of  650.00  from holding TotalEnergies EP Gabon or generate 3.87% return on investment over 90 days.

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

TotalEnergies EP Gabon  vs.  Airbus Group SE

TotalEnergies EP Gabon

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies EP Gabon are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TotalEnergies may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Airbus Group SE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Airbus Group may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with TotalEnergies and Airbus Group

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

The idea behind TotalEnergies EP Gabon and Airbus Group SE 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.