Correlation Between Schneider Electric and Arista Power
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Arista Power 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 Arista Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schneider Electric SA and Arista Power, you can compare the effects of market volatilities on Schneider Electric and Arista Power 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 Arista Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Arista Power.
Diversification Opportunities for Schneider Electric and Arista Power
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Schneider and Arista is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and Arista Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arista Power 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 SA are associated (or correlated) with Arista Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arista Power has no effect on the direction of Schneider Electric i.e., Schneider Electric and Arista Power go up and down completely randomly.
Pair Corralation between Schneider Electric and Arista Power
Assuming the 90 days horizon Schneider Electric SA is expected to generate 0.31 times more return on investment than Arista Power. However, Schneider Electric SA is 3.18 times less risky than Arista Power. It trades about 0.08 of its potential returns per unit of risk. Arista Power is currently generating about 0.02 per unit of risk. If you would invest 2,770 in Schneider Electric SA on August 29, 2024 and sell it today you would earn a total of 2,244 from holding Schneider Electric SA or generate 81.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SA vs. Arista Power
Performance |
| Timeline |
| Schneider Electric |
| Arista Power |
Schneider Electric and Arista Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and Arista Power
The main advantage of trading using opposite Schneider Electric and Arista Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Arista Power 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 Arista Power will offset losses from the drop in Arista Power's long position.| Schneider Electric vs. Sandvik AB ADR | Schneider Electric vs. Ingersoll Rand | Schneider Electric vs. Fanuc | Schneider Electric vs. Nordex SE |
| Arista Power vs. Aumann AG | Arista Power vs. Alfa Laval AB | Arista Power vs. Atlas Copco AB | Arista Power vs. American Commerce Solutions |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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