Correlation Between Regal Beloit and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Regal Beloit 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 Regal Beloit and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Beloit and Schneider Electric SA, you can compare the effects of market volatilities on Regal Beloit 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 Regal Beloit with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Beloit and Schneider Electric.
Diversification Opportunities for Regal Beloit and Schneider Electric
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Regal and Schneider is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Regal Beloit and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Regal Beloit 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 Regal Beloit 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 Regal Beloit i.e., Regal Beloit and Schneider Electric go up and down completely randomly.
Pair Corralation between Regal Beloit and Schneider Electric
Considering the 90-day investment horizon Regal Beloit is expected to generate 1.1 times less return on investment than Schneider Electric. In addition to that, Regal Beloit is 1.55 times more volatile than Schneider Electric SA. It trades about 0.04 of its total potential returns per unit of risk. Schneider Electric SA is currently generating about 0.07 per unit of volatility. If you would invest 3,383 in Schneider Electric SA on August 29, 2024 and sell it today you would earn a total of 1,650 from holding Schneider Electric SA or generate 48.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Beloit vs. Schneider Electric SA
Performance |
| Timeline |
| Regal Beloit |
| Schneider Electric |
Regal Beloit and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Beloit and Schneider Electric
The main advantage of trading using opposite Regal Beloit and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Beloit 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.| Regal Beloit vs. IDEX Corporation | Regal Beloit vs. Watts Water Technologies | Regal Beloit vs. Donaldson | Regal Beloit vs. Gorman Rupp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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