Correlation Between Graco and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Graco 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 Graco and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graco Inc and Schneider Electric SA, you can compare the effects of market volatilities on Graco 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 Graco with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Schneider Electric.
Diversification Opportunities for Graco and Schneider Electric
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Graco and Schneider is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Graco 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 Graco Inc 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 Graco i.e., Graco and Schneider Electric go up and down completely randomly.
Pair Corralation between Graco and Schneider Electric
Considering the 90-day investment horizon Graco is expected to generate 2.39 times less return on investment than Schneider Electric. But when comparing it to its historical volatility, Graco Inc is 1.34 times less risky than Schneider Electric. It trades about 0.07 of its potential returns per unit of risk. Schneider Electric SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,987 in Schneider Electric SA on August 25, 2024 and sell it today you would earn a total of 2,053 from holding Schneider Electric SA or generate 68.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Graco Inc vs. Schneider Electric SA
Performance |
| Timeline |
| Graco Inc |
| Schneider Electric |
Graco and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graco and Schneider Electric
The main advantage of trading using opposite Graco and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco 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.| Graco vs. Aquagold International | Graco vs. Morningstar Unconstrained Allocation | Graco vs. High Yield Municipal Fund | Graco vs. Thrivent High Yield |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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