Correlation Between Total Energy and Mccoy Global

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

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

Diversification Opportunities for Total Energy and Mccoy Global

0.28

Correlation Coefficient

Total Energy  Mccoy Global

Modest diversification

The 3 months correlation between Total and Mccoy is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Total Energy Services and Mccoy Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mccoy Global and Total Energy 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 Energy Services are associated (or correlated) with Mccoy Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mccoy Global has no effect on the direction of Total Energy i.e., Total Energy and Mccoy Global go up and down completely randomly.

Pair Corralation between Total Energy and Mccoy Global

Assuming the 90 days trading horizon Total Energy is expected to generate 1.39 times less return on investment than Mccoy Global. But when comparing it to its historical volatility, Total Energy Services is 2.66 times less risky than Mccoy Global. It trades about 0.29 of its potential returns per unit of risk. Mccoy Global is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Mccoy Global on September 17, 2024 and sell it today you would earn a total of  74.00  from holding Mccoy Global or generate 37.0% return on investment over 90 days.

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

Total Energy Services  vs.  Mccoy Global

Total Energy Services

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Total Energy Services are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Total Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Mccoy Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mccoy Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Mccoy Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Total Energy and Mccoy Global

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

The idea behind Total Energy Services and Mccoy Global 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.