Correlation Between TotalEnergies and Unit

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

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

Diversification Opportunities for TotalEnergies and Unit

-0.44

Correlation Coefficient

TotalEnergies  Unit

Very good diversification

The 3 months correlation between TotalEnergies and Unit is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Unit Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unit 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 Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unit has no effect on the direction of TotalEnergies i.e., TotalEnergies and Unit go up and down completely randomly.

Pair Corralation between TotalEnergies and Unit

Assuming the 90 days horizon TotalEnergies SE is expected to under-perform the Unit. But the pink sheet apears to be less risky and, when comparing its historical volatility, TotalEnergies SE is 12.05 times less risky than Unit. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Unit Corporation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Unit Corporation on September 16, 2024 and sell it today you would earn a total of  30.00  from holding Unit Corporation or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.38%
Values	Daily Returns

TotalEnergies SE  vs.  Unit Corp.

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Unit

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unit Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Unit showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TotalEnergies and Unit

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

The idea behind TotalEnergies SE and Unit Corporation 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.