Correlation Between Schneider Electric and Siemens Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Siemens Aktiengesellscha 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 Siemens Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schneider Electric SE and Siemens Aktiengesellschaft, you can compare the effects of market volatilities on Schneider Electric and Siemens Aktiengesellscha 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 Siemens Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Siemens Aktiengesellscha.
Diversification Opportunities for Schneider Electric and Siemens Aktiengesellscha
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Schneider and Siemens is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Siemens Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Aktiengesellscha 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 SE are associated (or correlated) with Siemens Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Aktiengesellscha has no effect on the direction of Schneider Electric i.e., Schneider Electric and Siemens Aktiengesellscha go up and down completely randomly.
Pair Corralation between Schneider Electric and Siemens Aktiengesellscha
Assuming the 90 days trading horizon Schneider Electric SE is expected to generate 1.02 times more return on investment than Siemens Aktiengesellscha. However, Schneider Electric is 1.02 times more volatile than Siemens Aktiengesellschaft. It trades about 0.01 of its potential returns per unit of risk. Siemens Aktiengesellschaft is currently generating about -0.05 per unit of risk. If you would invest 24,010 in Schneider Electric SE on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Schneider Electric SE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SE vs. Siemens Aktiengesellschaft
Performance |
| Timeline |
| Schneider Electric |
| Siemens Aktiengesellscha |
Schneider Electric and Siemens Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and Siemens Aktiengesellscha
The main advantage of trading using opposite Schneider Electric and Siemens Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Siemens Aktiengesellscha 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 Siemens Aktiengesellscha will offset losses from the drop in Siemens Aktiengesellscha's long position.| Schneider Electric vs. Superior Plus Corp | Schneider Electric vs. NMI Holdings | Schneider Electric vs. Origin Agritech | Schneider Electric vs. SIVERS SEMICONDUCTORS AB |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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