Correlation Between Sandvik AB and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Sandvik AB and Schneider Electric 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 Sandvik AB and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandvik AB and Schneider Electric SA, you can compare the effects of market volatilities on Sandvik AB and Schneider Electric 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 Sandvik AB with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandvik AB and Schneider Electric.
Diversification Opportunities for Sandvik AB and Schneider Electric
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sandvik and Schneider is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sandvik AB and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Sandvik AB 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 Sandvik AB are associated (or correlated) with Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Sandvik AB i.e., Sandvik AB and Schneider Electric go up and down completely randomly.
Pair Corralation between Sandvik AB and Schneider Electric
Assuming the 90 days horizon Sandvik AB is expected to under-perform the Schneider Electric. In addition to that, Sandvik AB is 1.33 times more volatile than Schneider Electric SA. It trades about -0.1 of its total potential returns per unit of risk. Schneider Electric SA is currently generating about 0.0 per unit of volatility. If you would invest 5,068 in Schneider Electric SA on August 29, 2024 and sell it today you would lose (54.00) from holding Schneider Electric SA or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandvik AB vs. Schneider Electric SA
Performance |
| Timeline |
| Sandvik AB |
| Schneider Electric |
Sandvik AB and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandvik AB and Schneider Electric
The main advantage of trading using opposite Sandvik AB and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandvik AB position performs unexpectedly, Schneider Electric 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 Schneider Electric will offset losses from the drop in Schneider Electric's long position.| Sandvik AB vs. Schneider Electric SA | Sandvik AB vs. KONE Oyj | Sandvik AB vs. Atlas Copco AB | Sandvik AB vs. Sandvik AB ADR |
| Schneider Electric vs. Sandvik AB ADR | Schneider Electric vs. Ingersoll Rand | Schneider Electric vs. Fanuc | Schneider Electric vs. Nordex SE |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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