Correlation Between Eaton PLC and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Eaton PLC 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 Eaton PLC and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Schneider Electric SA, you can compare the effects of market volatilities on Eaton PLC 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 Eaton PLC with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Schneider Electric.
Diversification Opportunities for Eaton PLC and Schneider Electric
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eaton and Schneider is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Eaton PLC 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 Eaton PLC 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 Eaton PLC i.e., Eaton PLC and Schneider Electric go up and down completely randomly.
Pair Corralation between Eaton PLC and Schneider Electric
Considering the 90-day investment horizon Eaton PLC is expected to generate 1.17 times more return on investment than Schneider Electric. However, Eaton PLC is 1.17 times more volatile than Schneider Electric SA. It trades about 0.09 of its potential returns per unit of risk. Schneider Electric SA is currently generating about 0.05 per unit of risk. If you would invest 28,837 in Eaton PLC on September 1, 2024 and sell it today you would earn a total of 8,705 from holding Eaton PLC or generate 30.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton PLC vs. Schneider Electric SA
Performance |
| Timeline |
| Eaton PLC |
| Schneider Electric |
Eaton PLC and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Schneider Electric
The main advantage of trading using opposite Eaton PLC and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC 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.| Eaton PLC vs. Illinois Tool Works | Eaton PLC vs. Dover | Eaton PLC vs. Cummins | Eaton PLC vs. Parker Hannifin |
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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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