Correlation Between Shawcor and Total Energy

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

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

Diversification Opportunities for Shawcor and Total Energy

0.81

Correlation Coefficient

Shawcor  Total Energy

Very poor diversification

The 3 months correlation between Shawcor and Total is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shawcor and Total Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Energy Services and Shawcor 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 Shawcor are associated (or correlated) with Total Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Energy Services has no effect on the direction of Shawcor i.e., Shawcor and Total Energy go up and down completely randomly.

Pair Corralation between Shawcor and Total Energy

If you would invest  728.00  in Total Energy Services on September 4, 2024 and sell it today you would earn a total of  106.00  from holding Total Energy Services or generate 14.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Shawcor  vs.  Total Energy Services

Shawcor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shawcor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Shawcor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Total Energy Services

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Total Energy Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Total Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shawcor and Total Energy

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

The idea behind Shawcor and Total Energy Services 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.