Correlation Between Nasdaq and Schneider Electric

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

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

Diversification Opportunities for Nasdaq and Schneider Electric

0.49

Correlation Coefficient

Nasdaq  Schneider Electric

Very weak diversification

The 3 months correlation between Nasdaq and Schneider is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Schneider Electric SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Schneider Electric go up and down completely randomly.

Pair Corralation between Nasdaq and Schneider Electric

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.66 times more return on investment than Schneider Electric. However, Nasdaq Inc is 1.52 times less risky than Schneider Electric. It trades about 0.17 of its potential returns per unit of risk. Schneider Electric SE is currently generating about 0.09 per unit of risk. If you would invest  7,308  in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of  779.00  from holding Nasdaq Inc or generate 10.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Nasdaq Inc  vs.  Schneider Electric SE

Nasdaq Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Schneider Electric

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Schneider Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nasdaq and Schneider Electric

The main advantage of trading using opposite Nasdaq and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and Schneider Electric SE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.