Correlation Between Schneider Electric and SMC Corp
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and SMC Corp 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 SMC Corp 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 SMC Corp Japan, you can compare the effects of market volatilities on Schneider Electric and SMC Corp 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 SMC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and SMC Corp.
Diversification Opportunities for Schneider Electric and SMC Corp
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Schneider and SMC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and SMC Corp Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp Japan 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 SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp Japan has no effect on the direction of Schneider Electric i.e., Schneider Electric and SMC Corp go up and down completely randomly.
Pair Corralation between Schneider Electric and SMC Corp
Assuming the 90 days horizon Schneider Electric SA is expected to under-perform the SMC Corp. In addition to that, Schneider Electric is 1.16 times more volatile than SMC Corp Japan. It trades about -0.16 of its total potential returns per unit of risk. SMC Corp Japan is currently generating about 0.09 per unit of volatility. If you would invest 2,114 in SMC Corp Japan on August 29, 2024 and sell it today you would earn a total of 54.00 from holding SMC Corp Japan or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Schneider Electric SA vs. SMC Corp Japan
Performance |
| Timeline |
| Schneider Electric |
| SMC Corp Japan |
Schneider Electric and SMC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and SMC Corp
The main advantage of trading using opposite Schneider Electric and SMC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, SMC Corp 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 SMC Corp will offset losses from the drop in SMC Corp's long position.| Schneider Electric vs. Sandvik AB ADR | Schneider Electric vs. Ingersoll Rand | Schneider Electric vs. Fanuc | Schneider Electric vs. Nordex SE |
| SMC Corp vs. Schneider Electric SE | SMC Corp vs. Atlas Copco AB | SMC Corp vs. Fanuc | SMC Corp vs. Sandvik AB |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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