Correlation Between Schneider Electric and Rosinbomb
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Rosinbomb 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 Rosinbomb 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 Rosinbomb, you can compare the effects of market volatilities on Schneider Electric and Rosinbomb 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 Rosinbomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Rosinbomb.
Diversification Opportunities for Schneider Electric and Rosinbomb
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Schneider and Rosinbomb is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and Rosinbomb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosinbomb 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 Rosinbomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosinbomb has no effect on the direction of Schneider Electric i.e., Schneider Electric and Rosinbomb go up and down completely randomly.
Pair Corralation between Schneider Electric and Rosinbomb
Assuming the 90 days horizon Schneider Electric is expected to generate 4.87 times less return on investment than Rosinbomb. But when comparing it to its historical volatility, Schneider Electric SA is 9.59 times less risky than Rosinbomb. It trades about 0.09 of its potential returns per unit of risk. Rosinbomb is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1.35 in Rosinbomb on September 6, 2024 and sell it today you would lose (1.00) from holding Rosinbomb or give up 74.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Schneider Electric SA vs. Rosinbomb
Performance |
Timeline |
Schneider Electric |
Rosinbomb |
Schneider Electric and Rosinbomb Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Schneider Electric and Rosinbomb
The main advantage of trading using opposite Schneider Electric and Rosinbomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Rosinbomb 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 Rosinbomb will offset losses from the drop in Rosinbomb's long position.Schneider Electric vs. Sandvik AB ADR | Schneider Electric vs. Ingersoll Rand | Schneider Electric vs. Fanuc | Schneider Electric vs. Nordex SE |
Rosinbomb vs. Titan Logix Corp | Rosinbomb vs. Nel ASA | Rosinbomb vs. Weir Group PLC | Rosinbomb vs. Nel ASA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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