Correlation Between Schneider Electric and Ballard Power
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Ballard 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 Ballard 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 Ballard Power Systems, you can compare the effects of market volatilities on Schneider Electric and Ballard 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 Ballard Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Ballard Power.
Diversification Opportunities for Schneider Electric and Ballard Power
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Schneider and Ballard is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and Ballard Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballard Power Systems 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 Ballard Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballard Power Systems has no effect on the direction of Schneider Electric i.e., Schneider Electric and Ballard Power go up and down completely randomly.
Pair Corralation between Schneider Electric and Ballard Power
Assuming the 90 days horizon Schneider Electric SA is expected to generate 0.29 times more return on investment than Ballard Power. However, Schneider Electric SA is 3.5 times less risky than Ballard Power. It trades about -0.15 of its potential returns per unit of risk. Ballard Power Systems is currently generating about -0.11 per unit of risk. If you would invest 5,312 in Schneider Electric SA on August 27, 2024 and sell it today you would lose (279.00) from holding Schneider Electric SA or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SA vs. Ballard Power Systems
Performance |
| Timeline |
| Schneider Electric |
| Ballard Power Systems |
Schneider Electric and Ballard Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and Ballard Power
The main advantage of trading using opposite Schneider Electric and Ballard Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Ballard 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 Ballard Power will offset losses from the drop in Ballard Power's long position.| Schneider Electric vs. Sandvik AB ADR | Schneider Electric vs. Ingersoll Rand | Schneider Electric vs. Fanuc | Schneider Electric vs. Nordex SE |
| Ballard Power vs. Emerson Electric | Ballard Power vs. Eaton PLC | Ballard Power vs. Parker Hannifin | Ballard Power vs. Illinois Tool Works |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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