Correlation Between TotalEnergies and Adyen NV

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

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

Diversification Opportunities for TotalEnergies and Adyen NV

-0.3

Correlation Coefficient

TotalEnergies  Adyen NV

Very good diversification

The 3 months correlation between TotalEnergies and Adyen is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Adyen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adyen NV 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 Adyen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adyen NV has no effect on the direction of TotalEnergies i.e., TotalEnergies and Adyen NV go up and down completely randomly.

Pair Corralation between TotalEnergies and Adyen NV

Assuming the 90 days trading horizon TotalEnergies SE is expected to under-perform the Adyen NV. But the stock apears to be less risky and, when comparing its historical volatility, TotalEnergies SE is 1.34 times less risky than Adyen NV. The stock trades about -0.18 of its potential returns per unit of risk. The Adyen NV is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  138,380  in Adyen NV on September 20, 2024 and sell it today you would earn a total of  11,960  from holding Adyen NV or generate 8.64% return on investment over 90 days.

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

TotalEnergies SE  vs.  Adyen NV

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.

Adyen NV

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adyen NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Adyen NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TotalEnergies and Adyen NV

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

The idea behind TotalEnergies SE and Adyen NV 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.