Correlation Between Schneider Electric and WEG SA
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and WEG SA 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 WEG SA 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 WEG SA ADR, you can compare the effects of market volatilities on Schneider Electric and WEG SA 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 WEG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and WEG SA.
Diversification Opportunities for Schneider Electric and WEG SA
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schneider and WEG is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and WEG SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEG SA ADR 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 WEG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEG SA ADR has no effect on the direction of Schneider Electric i.e., Schneider Electric and WEG SA go up and down completely randomly.
Pair Corralation between Schneider Electric and WEG SA
Assuming the 90 days horizon Schneider Electric SE is expected to generate 1.04 times more return on investment than WEG SA. However, Schneider Electric is 1.04 times more volatile than WEG SA ADR. It trades about 0.06 of its potential returns per unit of risk. WEG SA ADR is currently generating about 0.04 per unit of risk. If you would invest 17,323 in Schneider Electric SE on August 27, 2024 and sell it today you would earn a total of 8,127 from holding Schneider Electric SE or generate 46.91% 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. WEG SA ADR
Performance |
| Timeline |
| Schneider Electric |
| WEG SA ADR |
Schneider Electric and WEG SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and WEG SA
The main advantage of trading using opposite Schneider Electric and WEG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, WEG SA 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 WEG SA will offset losses from the drop in WEG SA's long position.| Schneider Electric vs. Arista Power | Schneider Electric vs. Atlas Copco AB | Schneider Electric vs. American Commerce Solutions |
| WEG SA vs. Nuburu Inc | WEG SA vs. Shapeways Holdings, Common | WEG SA vs. Smith AO | WEG SA vs. Crane Company |
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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