Correlation Between Flowserve and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Flowserve 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 Flowserve and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and Schneider Electric SA, you can compare the effects of market volatilities on Flowserve 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 Flowserve with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and Schneider Electric.
Diversification Opportunities for Flowserve and Schneider Electric
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flowserve and Schneider is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Flowserve 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 Flowserve 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 Flowserve i.e., Flowserve and Schneider Electric go up and down completely randomly.
Pair Corralation between Flowserve and Schneider Electric
Considering the 90-day investment horizon Flowserve is expected to generate 1.07 times more return on investment than Schneider Electric. However, Flowserve is 1.07 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 0.08 per unit of risk. If you would invest 2,998 in Flowserve on August 26, 2024 and sell it today you would earn a total of 3,102 from holding Flowserve or generate 103.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. Schneider Electric SA
Performance |
| Timeline |
| Flowserve |
| Schneider Electric |
Flowserve and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and Schneider Electric
The main advantage of trading using opposite Flowserve and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve 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.| Flowserve vs. IDEX Corporation | Flowserve vs. Donaldson | Flowserve vs. Ingersoll Rand | Flowserve vs. Franklin Electric Co |
| Schneider Electric vs. Sandvik AB ADR | Schneider Electric vs. Ingersoll Rand | Schneider Electric vs. Fanuc | Schneider Electric vs. Nordex SE |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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