Correlation Between Otis Worldwide and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Otis Worldwide and Schneider Electric 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 Otis Worldwide and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otis Worldwide Corp and Schneider Electric SE, you can compare the effects of market volatilities on Otis Worldwide and Schneider Electric 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 Otis Worldwide with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otis Worldwide and Schneider Electric.
Diversification Opportunities for Otis Worldwide and Schneider Electric
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Otis and Schneider is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Otis Worldwide Corp and Schneider Electric SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Otis Worldwide 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 Otis Worldwide Corp are associated (or correlated) with Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Otis Worldwide i.e., Otis Worldwide and Schneider Electric go up and down completely randomly.
Pair Corralation between Otis Worldwide and Schneider Electric
Assuming the 90 days horizon Otis Worldwide Corp is expected to under-perform the Schneider Electric. But the stock apears to be less risky and, when comparing its historical volatility, Otis Worldwide Corp is 1.25 times less risky than Schneider Electric. The stock trades about -0.01 of its potential returns per unit of risk. The Schneider Electric SE is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 24,065 in Schneider Electric SE on October 20, 2024 and sell it today you would earn a total of 1,840 from holding Schneider Electric SE or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otis Worldwide Corp vs. Schneider Electric SE
Performance |
| Timeline |
| Otis Worldwide Corp |
| Schneider Electric |
Otis Worldwide and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otis Worldwide and Schneider Electric
The main advantage of trading using opposite Otis Worldwide and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otis Worldwide position performs unexpectedly, Schneider Electric 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 Schneider Electric will offset losses from the drop in Schneider Electric's long position.| Otis Worldwide vs. INTER CARS SA | Otis Worldwide vs. STRAYER EDUCATION | Otis Worldwide vs. Cars Inc | Otis Worldwide vs. INTERSHOP Communications Aktiengesellschaft |
| Schneider Electric vs. GEAR4MUSIC LS 10 | Schneider Electric vs. UNIVMUSIC GRPADR050 | Schneider Electric vs. Apollo Investment Corp | Schneider Electric vs. Scientific Games |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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