Correlation Between Schneider Electric and Danone SA
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Danone SA 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 Danone SA 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 Danone SA, you can compare the effects of market volatilities on Schneider Electric and Danone SA 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 Danone SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Danone SA.
Diversification Opportunities for Schneider Electric and Danone SA
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Schneider and Danone is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA 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 Danone SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone SA has no effect on the direction of Schneider Electric i.e., Schneider Electric and Danone SA go up and down completely randomly.
Pair Corralation between Schneider Electric and Danone SA
Assuming the 90 days horizon Schneider Electric SE is expected to under-perform the Danone SA. In addition to that, Schneider Electric is 3.09 times more volatile than Danone SA. It trades about -0.02 of its total potential returns per unit of risk. Danone SA is currently generating about 0.21 per unit of volatility. If you would invest 6,454 in Danone SA on November 5, 2024 and sell it today you would earn a total of 294.00 from holding Danone SA or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SE vs. Danone SA
Performance |
| Timeline |
| Schneider Electric |
| Danone SA |
Schneider Electric and Danone SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and Danone SA
The main advantage of trading using opposite Schneider Electric and Danone SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Danone SA 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 Danone SA will offset losses from the drop in Danone SA's long position.| Schneider Electric vs. Air Liquide SA | Schneider Electric vs. Vinci SA | Schneider Electric vs. LOreal SA | Schneider Electric vs. Compagnie de Saint Gobain |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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