Correlation Between IDEX and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both IDEX 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 IDEX and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDEX Corporation and Schneider Electric SA, you can compare the effects of market volatilities on IDEX 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 IDEX with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDEX and Schneider Electric.
Diversification Opportunities for IDEX and Schneider Electric
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IDEX and Schneider is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Corp. and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and IDEX 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 IDEX Corporation 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 IDEX i.e., IDEX and Schneider Electric go up and down completely randomly.
Pair Corralation between IDEX and Schneider Electric
Considering the 90-day investment horizon IDEX Corporation is expected to generate 1.01 times more return on investment than Schneider Electric. However, IDEX is 1.01 times more volatile than Schneider Electric SA. It trades about 0.14 of its potential returns per unit of risk. Schneider Electric SA is currently generating about 0.0 per unit of risk. If you would invest 20,450 in IDEX Corporation on August 29, 2024 and sell it today you would earn a total of 2,752 from holding IDEX Corporation or generate 13.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
IDEX Corp. vs. Schneider Electric SA
Performance |
| Timeline |
| IDEX |
| Schneider Electric |
IDEX and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDEX and Schneider Electric
The main advantage of trading using opposite IDEX and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEX 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.The idea behind IDEX Corporation and Schneider Electric SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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