Correlation Between Schneider Electric and Pentair Plc
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Pentair Plc 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 Pentair Plc 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 Pentair plc, you can compare the effects of market volatilities on Schneider Electric and Pentair Plc 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 Pentair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Pentair Plc.
Diversification Opportunities for Schneider Electric and Pentair Plc
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schneider and Pentair is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc 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 Pentair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair plc has no effect on the direction of Schneider Electric i.e., Schneider Electric and Pentair Plc go up and down completely randomly.
Pair Corralation between Schneider Electric and Pentair Plc
Assuming the 90 days horizon Schneider Electric SE is expected to generate 1.71 times more return on investment than Pentair Plc. However, Schneider Electric is 1.71 times more volatile than Pentair plc. It trades about -0.04 of its potential returns per unit of risk. Pentair plc is currently generating about -0.15 per unit of risk. If you would invest 24,030 in Schneider Electric SE on December 30, 2024 and sell it today you would lose (2,195) from holding Schneider Electric SE or give up 9.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Schneider Electric SE vs. Pentair plc
Performance |
Timeline |
Schneider Electric |
Pentair plc |
Schneider Electric and Pentair Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Schneider Electric and Pentair Plc
The main advantage of trading using opposite Schneider Electric and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Pentair Plc 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 Pentair Plc will offset losses from the drop in Pentair Plc's long position.Schneider Electric vs. WILLIS LEASE FIN | Schneider Electric vs. Nucletron Electronic Aktiengesellschaft | Schneider Electric vs. Lendlease Group | Schneider Electric vs. KIMBALL ELECTRONICS |
Pentair Plc vs. Tradeweb Markets | Pentair Plc vs. Sunny Optical Technology | Pentair Plc vs. Kingdee International Software | Pentair Plc vs. SUN ART RETAIL |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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