Correlation Between Schneider Electric and Weir Group
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Weir Group 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 Weir Group 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 The Weir Group, you can compare the effects of market volatilities on Schneider Electric and Weir Group 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 Weir Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Weir Group.
Diversification Opportunities for Schneider Electric and Weir Group
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schneider and Weir is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and The Weir Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weir Group 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 Weir Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weir Group has no effect on the direction of Schneider Electric i.e., Schneider Electric and Weir Group go up and down completely randomly.
Pair Corralation between Schneider Electric and Weir Group
Assuming the 90 days horizon Schneider Electric SE is expected to generate 1.02 times more return on investment than Weir Group. However, Schneider Electric is 1.02 times more volatile than The Weir Group. It trades about 0.07 of its potential returns per unit of risk. The Weir Group is currently generating about 0.04 per unit of risk. If you would invest 14,943 in Schneider Electric SE on September 4, 2024 and sell it today you would earn a total of 10,658 from holding Schneider Electric SE or generate 71.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 71.52% |
| Values | Daily Returns |
Schneider Electric SE vs. The Weir Group
Performance |
| Timeline |
| Schneider Electric |
| Weir Group |
Schneider Electric and Weir Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and Weir Group
The main advantage of trading using opposite Schneider Electric and Weir Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Weir Group 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 Weir Group will offset losses from the drop in Weir Group's long position.| Schneider Electric vs. Dear Cashmere Holding | Schneider Electric vs. Goff Corp | Schneider Electric vs. Wialan Technologies | Schneider Electric vs. Cgrowth Capital |
| Weir Group vs. Shanghai Electric Group | Weir Group vs. Xinjiang Goldwind Science | Weir Group vs. American Superconductor | Weir Group vs. Cummins |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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