Correlation Between Schneider Electric and Sandvik AB
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Sandvik AB 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 Schneider Electric and Sandvik AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schneider Electric SE and Sandvik AB, you can compare the effects of market volatilities on Schneider Electric and Sandvik AB 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 Schneider Electric with a short position of Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Sandvik AB.
Diversification Opportunities for Schneider Electric and Sandvik AB
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Schneider and Sandvik is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Sandvik AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik AB and Schneider Electric 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 Schneider Electric SE are associated (or correlated) with Sandvik AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandvik AB has no effect on the direction of Schneider Electric i.e., Schneider Electric and Sandvik AB go up and down completely randomly.
Pair Corralation between Schneider Electric and Sandvik AB
Assuming the 90 days horizon Schneider Electric SE is expected to generate 1.25 times more return on investment than Sandvik AB. However, Schneider Electric is 1.25 times more volatile than Sandvik AB. It trades about 0.02 of its potential returns per unit of risk. Sandvik AB is currently generating about -0.06 per unit of risk. If you would invest 24,511 in Schneider Electric SE on August 29, 2024 and sell it today you would earn a total of 589.00 from holding Schneider Electric SE or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SE vs. Sandvik AB
Performance |
| Timeline |
| Schneider Electric |
| Sandvik AB |
Schneider Electric and Sandvik AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and Sandvik AB
The main advantage of trading using opposite Schneider Electric and Sandvik AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Sandvik AB 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 Sandvik AB will offset losses from the drop in Sandvik AB's long position.| Schneider Electric vs. SMC Corp Japan | Schneider Electric vs. Atlas Copco AB | Schneider Electric vs. Fanuc | Schneider Electric vs. Ebara Corp ADR |
| Sandvik AB vs. Schneider Electric SA | Sandvik AB vs. KONE Oyj | Sandvik AB vs. Atlas Copco AB | Sandvik AB vs. Sandvik AB ADR |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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