Correlation Between Schneider Electric and GE Vernova

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

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

Diversification Opportunities for Schneider Electric and GE Vernova

0.68

Correlation Coefficient

Schneider Electric  GE Vernova

Poor diversification

The 3 months correlation between Schneider and GEV is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 SA are associated (or correlated) with GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Schneider Electric i.e., Schneider Electric and GE Vernova go up and down completely randomly.

Pair Corralation between Schneider Electric and GE Vernova

Assuming the 90 days horizon Schneider Electric is expected to generate 1.31 times less return on investment than GE Vernova. But when comparing it to its historical volatility, Schneider Electric SA is 1.75 times less risky than GE Vernova. It trades about 0.02 of its potential returns per unit of risk. GE Vernova LLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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

Schneider Electric SA  vs.  GE Vernova LLC

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.

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.

Pair Trading with Schneider Electric and GE Vernova

The main advantage of trading using opposite Schneider Electric and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, GE Vernova 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 GE Vernova will offset losses from the drop in GE Vernova's long position.

The idea behind Schneider Electric SA and GE Vernova LLC 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.