Correlation Between Vinci SA and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Vinci SA 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 Vinci SA and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vinci SA and Schneider Electric SE, you can compare the effects of market volatilities on Vinci SA 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 Vinci SA with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinci SA and Schneider Electric.
Diversification Opportunities for Vinci SA and Schneider Electric
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vinci and Schneider is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vinci SA and Schneider Electric SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Vinci SA 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 Vinci SA 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 Vinci SA i.e., Vinci SA and Schneider Electric go up and down completely randomly.
Pair Corralation between Vinci SA and Schneider Electric
Assuming the 90 days horizon Vinci SA is expected to generate 4.72 times less return on investment than Schneider Electric. But when comparing it to its historical volatility, Vinci SA is 1.35 times less risky than Schneider Electric. It trades about 0.02 of its potential returns per unit of risk. Schneider Electric SE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13,350 in Schneider Electric SE on August 27, 2024 and sell it today you would earn a total of 10,825 from holding Schneider Electric SE or generate 81.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vinci SA vs. Schneider Electric SE
Performance |
| Timeline |
| Vinci SA |
| Schneider Electric |
Vinci SA and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vinci SA and Schneider Electric
The main advantage of trading using opposite Vinci SA and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vinci SA 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.| Vinci SA vs. Air Liquide SA | Vinci SA vs. Bouygues SA | Vinci SA vs. AXA SA | Vinci SA vs. Compagnie de Saint Gobain |
| Schneider Electric vs. Air Liquide SA | Schneider Electric vs. Vinci SA | Schneider Electric vs. LOreal SA | Schneider Electric vs. Compagnie de Saint Gobain |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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