Correlation Between Schneider Electric and Siemens AG
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Siemens AG 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 Siemens AG 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 Siemens AG Class, you can compare the effects of market volatilities on Schneider Electric and Siemens AG 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 Siemens AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Siemens AG.
Diversification Opportunities for Schneider Electric and Siemens AG
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schneider and Siemens is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Siemens AG Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens AG Class 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 Siemens AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens AG Class has no effect on the direction of Schneider Electric i.e., Schneider Electric and Siemens AG go up and down completely randomly.
Pair Corralation between Schneider Electric and Siemens AG
Assuming the 90 days horizon Schneider Electric SE is expected to generate 1.14 times more return on investment than Siemens AG. However, Schneider Electric is 1.14 times more volatile than Siemens AG Class. It trades about 0.03 of its potential returns per unit of risk. Siemens AG Class is currently generating about 0.01 per unit of risk. If you would invest 24,530 in Schneider Electric SE on August 31, 2024 and sell it today you would earn a total of 1,070 from holding Schneider Electric SE or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SE vs. Siemens AG Class
Performance |
| Timeline |
| Schneider Electric |
| Siemens AG Class |
Schneider Electric and Siemens AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and Siemens AG
The main advantage of trading using opposite Schneider Electric and Siemens AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Siemens AG 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 Siemens AG will offset losses from the drop in Siemens AG'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 |
| Siemens AG vs. Shapeways Holdings, Common | Siemens AG vs. JE Cleantech Holdings | Siemens AG vs. Greenland Acquisition Corp | Siemens AG vs. Laser Photonics |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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