Correlation Between GE Vernova and Schneider Electric

Can any of the company-specific risk be diversified away by investing in both GE Vernova 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 GE Vernova and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GE Vernova LLC and Schneider Electric SA, you can compare the effects of market volatilities on GE Vernova 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 GE Vernova with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Vernova and Schneider Electric.

Diversification Opportunities for GE Vernova and Schneider Electric

0.68

Correlation Coefficient

GE Vernova  Schneider Electric

Poor diversification

The 3 months correlation between GEV and Schneider is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and GE Vernova 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 GE Vernova LLC 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 GE Vernova i.e., GE Vernova and Schneider Electric go up and down completely randomly.

Pair Corralation between GE Vernova and Schneider Electric

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 1.75 times more return on investment than Schneider Electric. However, GE Vernova is 1.75 times more volatile than Schneider Electric SA. It trades about 0.01 of its potential returns per unit of risk. Schneider Electric SA is currently generating about 0.02 per unit of risk. If you would invest  34,492  in GE Vernova LLC on December 22, 2024 and sell it today you would lose (1,105) from holding GE Vernova LLC or give up 3.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GE Vernova LLC  vs.  Schneider Electric SA

GE Vernova LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GE Vernova LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GE Vernova is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Schneider Electric

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Schneider Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GE Vernova and Schneider Electric

The main advantage of trading using opposite GE Vernova and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Vernova 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.

The idea behind GE Vernova LLC and Schneider Electric SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.