Correlation Between Schneider Electric and Vinci SA

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

Diversification Opportunities for Schneider Electric and Vinci SA

-0.46

Correlation Coefficient

Schneider Electric  Vinci SA

Very good diversification

The 3 months correlation between Schneider and Vinci is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Vinci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA 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 Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA has no effect on the direction of Schneider Electric i.e., Schneider Electric and Vinci SA go up and down completely randomly.

Pair Corralation between Schneider Electric and Vinci SA

Assuming the 90 days horizon Schneider Electric SE is expected to generate 1.19 times more return on investment than Vinci SA. However, Schneider Electric is 1.19 times more volatile than Vinci SA. It trades about 0.06 of its potential returns per unit of risk. Vinci SA is currently generating about -0.08 per unit of risk. If you would invest  23,060  in Schneider Electric SE on September 2, 2024 and sell it today you would earn a total of  1,290  from holding Schneider Electric SE or generate 5.59% return on investment over 90 days.

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

Schneider Electric SE  vs.  Vinci SA

Schneider Electric

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat 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.

Vinci SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vinci SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Schneider Electric and Vinci SA

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

The idea behind Schneider Electric SE and Vinci 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.