Correlation Between Schneider Electric and TECO 2030

Can any of the company-specific risk be diversified away by investing in both Schneider Electric and TECO 2030 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 TECO 2030 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 TECO 2030 ASA, you can compare the effects of market volatilities on Schneider Electric and TECO 2030 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 TECO 2030. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and TECO 2030.

Diversification Opportunities for Schneider Electric and TECO 2030

0.66

Correlation Coefficient

Schneider Electric  TECO 2030

Poor diversification

The 3 months correlation between Schneider and TECO is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and TECO 2030 ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TECO 2030 ASA 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 TECO 2030. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TECO 2030 ASA has no effect on the direction of Schneider Electric i.e., Schneider Electric and TECO 2030 go up and down completely randomly.

Pair Corralation between Schneider Electric and TECO 2030

Assuming the 90 days horizon Schneider Electric SA is expected to generate 0.05 times more return on investment than TECO 2030. However, Schneider Electric SA is 21.86 times less risky than TECO 2030. It trades about -0.01 of its potential returns per unit of risk. TECO 2030 ASA is currently generating about -0.16 per unit of risk. If you would invest  5,014  in Schneider Electric SA on September 26, 2024 and sell it today you would lose (23.00) from holding Schneider Electric SA or give up 0.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Schneider Electric SA  vs.  TECO 2030 ASA

Schneider Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schneider Electric SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

TECO 2030 ASA

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days TECO 2030 ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Schneider Electric and TECO 2030

The main advantage of trading using opposite Schneider Electric and TECO 2030 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, TECO 2030 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 TECO 2030 will offset losses from the drop in TECO 2030's long position.

The idea behind Schneider Electric SA and TECO 2030 ASA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.