Correlation Between Schneider Electric and GE Aerospace
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and GE Aerospace 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 GE Aerospace 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 GE Aerospace, you can compare the effects of market volatilities on Schneider Electric and GE Aerospace 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 GE Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and GE Aerospace.
Diversification Opportunities for Schneider Electric and GE Aerospace
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schneider and GE Aerospace is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and GE Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Aerospace 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 GE Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Aerospace has no effect on the direction of Schneider Electric i.e., Schneider Electric and GE Aerospace go up and down completely randomly.
Pair Corralation between Schneider Electric and GE Aerospace
Assuming the 90 days horizon Schneider Electric SA is expected to under-perform the GE Aerospace. But the pink sheet apears to be less risky and, when comparing its historical volatility, Schneider Electric SA is 1.02 times less risky than GE Aerospace. The pink sheet trades about -0.08 of its potential returns per unit of risk. The GE Aerospace is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 17,178 in GE Aerospace on September 1, 2024 and sell it today you would earn a total of 1,038 from holding GE Aerospace or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SA vs. GE Aerospace
Performance |
| Timeline |
| Schneider Electric |
| GE Aerospace |
Schneider Electric and GE Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and GE Aerospace
The main advantage of trading using opposite Schneider Electric and GE Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, GE Aerospace 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 GE Aerospace will offset losses from the drop in GE Aerospace's long position.| Schneider Electric vs. GE Aerospace | Schneider Electric vs. Eaton PLC | Schneider Electric vs. Siemens AG Class | Schneider Electric vs. Parker Hannifin |
| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |