Correlation Between Nordex SE and Schneider Electric

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

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

Diversification Opportunities for Nordex SE and Schneider Electric

-0.02

Correlation Coefficient

Nordex SE  Schneider Electric

Good diversification

The 3 months correlation between Nordex and Schneider is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nordex SE and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Nordex SE 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 Nordex SE 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 Nordex SE i.e., Nordex SE and Schneider Electric go up and down completely randomly.

Pair Corralation between Nordex SE and Schneider Electric

Assuming the 90 days horizon Nordex SE is expected to under-perform the Schneider Electric. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nordex SE is 1.05 times less risky than Schneider Electric. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Schneider Electric SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,010  in Schneider Electric SA on September 3, 2024 and sell it today you would earn a total of  147.00  from holding Schneider Electric SA or generate 2.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Nordex SE  vs.  Schneider Electric SA

Nordex SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordex SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nordex SE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Schneider Electric

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SA are ranked lower than 2 (%) 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 Nordex SE and Schneider Electric

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