Correlation Between Schneider Electric and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Illinois Tool 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 Illinois Tool 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 Illinois Tool Works, you can compare the effects of market volatilities on Schneider Electric and Illinois Tool 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 Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Illinois Tool.
Diversification Opportunities for Schneider Electric and Illinois Tool
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Schneider and Illinois is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Illinois Tool Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illinois Tool Works 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 Illinois Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illinois Tool Works has no effect on the direction of Schneider Electric i.e., Schneider Electric and Illinois Tool go up and down completely randomly.
Pair Corralation between Schneider Electric and Illinois Tool
Assuming the 90 days horizon Schneider Electric SE is expected to generate 2.43 times more return on investment than Illinois Tool. However, Schneider Electric is 2.43 times more volatile than Illinois Tool Works. It trades about 0.03 of its potential returns per unit of risk. Illinois Tool Works is currently generating about -0.02 per unit of risk. If you would invest 24,708 in Schneider Electric SE on December 22, 2024 and sell it today you would earn a total of 492.00 from holding Schneider Electric SE or generate 1.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Schneider Electric SE vs. Illinois Tool Works
Performance |
Timeline |
Schneider Electric |
Illinois Tool Works |
Schneider Electric and Illinois Tool Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Schneider Electric and Illinois Tool
The main advantage of trading using opposite Schneider Electric and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Illinois Tool 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 Illinois Tool will offset losses from the drop in Illinois Tool's long position.Schneider Electric vs. SMC Corp Japan | Schneider Electric vs. Atlas Copco AB | Schneider Electric vs. Fanuc | Schneider Electric vs. Ebara Corp ADR |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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