Correlation Between Mitsubishi Heavy and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Heavy 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 Mitsubishi Heavy and Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Heavy Industries and Schneider Electric SA, you can compare the effects of market volatilities on Mitsubishi Heavy 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 Mitsubishi Heavy with a short position of Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Heavy and Schneider Electric.
Diversification Opportunities for Mitsubishi Heavy and Schneider Electric
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsubishi and Schneider is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Heavy Industries and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Mitsubishi Heavy 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 Mitsubishi Heavy Industries 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 Mitsubishi Heavy i.e., Mitsubishi Heavy and Schneider Electric go up and down completely randomly.
Pair Corralation between Mitsubishi Heavy and Schneider Electric
Assuming the 90 days horizon Mitsubishi Heavy Industries is expected to generate 2.18 times more return on investment than Schneider Electric. However, Mitsubishi Heavy is 2.18 times more volatile than Schneider Electric SA. It trades about -0.03 of its potential returns per unit of risk. Schneider Electric SA is currently generating about -0.11 per unit of risk. If you would invest 886.00 in Mitsubishi Heavy Industries on January 25, 2024 and sell it today you would lose (25.00) from holding Mitsubishi Heavy Industries or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Heavy Industries vs. Schneider Electric SA
Performance |
| Timeline |
| Mitsubishi Heavy Ind |
| Schneider Electric |
Mitsubishi Heavy and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Heavy and Schneider Electric
The main advantage of trading using opposite Mitsubishi Heavy and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Heavy 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.| Mitsubishi Heavy vs. GE Aerospace | Mitsubishi Heavy vs. Eaton PLC | Mitsubishi Heavy vs. Illinois Tool Works | Mitsubishi Heavy vs. Parker Hannifin |
| Schneider Electric vs. GE Aerospace | Schneider Electric vs. Eaton PLC | Schneider Electric vs. Illinois Tool Works | Schneider Electric vs. Parker Hannifin |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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