Correlation Between Schneider Electric and Nordex SE
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Nordex SE 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 Nordex SE 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 Nordex SE, you can compare the effects of market volatilities on Schneider Electric and Nordex SE 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 Nordex SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Nordex SE.
Diversification Opportunities for Schneider Electric and Nordex SE
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Schneider and Nordex is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE 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 Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Schneider Electric i.e., Schneider Electric and Nordex SE go up and down completely randomly.
Pair Corralation between Schneider Electric and Nordex SE
Assuming the 90 days horizon Schneider Electric is expected to generate 6.98 times less return on investment than Nordex SE. In addition to that, Schneider Electric is 1.26 times more volatile than Nordex SE. It trades about 0.01 of its total potential returns per unit of risk. Nordex SE is currently generating about 0.06 per unit of volatility. If you would invest 675.00 in Nordex SE on August 25, 2024 and sell it today you would earn a total of 63.00 from holding Nordex SE or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SA vs. Nordex SE
Performance |
| Timeline |
| Schneider Electric |
| Nordex SE |
Schneider Electric and Nordex SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and Nordex SE
The main advantage of trading using opposite Schneider Electric and Nordex SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Nordex SE 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 Nordex SE will offset losses from the drop in Nordex SE's long position.| Schneider Electric vs. Sandvik AB ADR | Schneider Electric vs. Ingersoll Rand | Schneider Electric vs. Fanuc | Schneider Electric vs. Nordex SE |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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