Correlation Between Ingersoll Rand and Schneider Electric

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

By analyzing existing cross correlation between Ingersoll Rand and Schneider Electric SA, you can compare the effects of market volatilities on Ingersoll Rand and Schneider Electric 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 Ingersoll Rand with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Schneider Electric.

Diversification Opportunities for Ingersoll Rand and Schneider Electric

0.41

Correlation Coefficient

Ingersoll Rand  Schneider Electric

Very weak diversification

The 3 months correlation between Ingersoll and Schneider is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Ingersoll Rand 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 Ingersoll Rand are associated (or correlated) with Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Schneider Electric go up and down completely randomly.

Pair Corralation between Ingersoll Rand and Schneider Electric

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 0.97 times more return on investment than Schneider Electric. However, Ingersoll Rand is 1.03 times less risky than Schneider Electric. It trades about 0.18 of its potential returns per unit of risk. Schneider Electric SA is currently generating about 0.04 per unit of risk. If you would invest  8,831  in Ingersoll Rand on September 3, 2024 and sell it today you would earn a total of  1,586  from holding Ingersoll Rand or generate 17.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ingersoll Rand  vs.  Schneider Electric SA

Ingersoll Rand

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ingersoll Rand are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Ingersoll Rand reported solid returns over the last few months and may actually be approaching a breakup point.

Schneider Electric

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SA are ranked lower than 2 (%) 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.

Pair Trading with Ingersoll Rand and Schneider Electric

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

The idea behind Ingersoll Rand and Schneider Electric SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.