Correlation Between APPLIED MATERIALS and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS 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 APPLIED MATERIALS and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Schneider Electric SE, you can compare the effects of market volatilities on APPLIED MATERIALS 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 APPLIED MATERIALS with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Schneider Electric.
Diversification Opportunities for APPLIED MATERIALS and Schneider Electric
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between APPLIED and Schneider is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Schneider Electric SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and Schneider Electric go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Schneider Electric
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the Schneider Electric. In addition to that, APPLIED MATERIALS is 1.77 times more volatile than Schneider Electric SE. It trades about -0.03 of its total potential returns per unit of risk. Schneider Electric SE is currently generating about 0.05 per unit of volatility. If you would invest 22,410 in Schneider Electric SE on September 2, 2024 and sell it today you would earn a total of 1,950 from holding Schneider Electric SE or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Schneider Electric SE
Performance |
| Timeline |
| APPLIED MATERIALS |
| Schneider Electric |
APPLIED MATERIALS and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Schneider Electric
The main advantage of trading using opposite APPLIED MATERIALS and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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.| APPLIED MATERIALS vs. SBM OFFSHORE | APPLIED MATERIALS vs. Wizz Air Holdings | APPLIED MATERIALS vs. Selective Insurance Group | APPLIED MATERIALS vs. Japan Post Insurance |
| Schneider Electric vs. Goosehead Insurance | Schneider Electric vs. The Hanover Insurance | Schneider Electric vs. Reinsurance Group of | Schneider Electric vs. SIDETRADE EO 1 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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