Correlation Between Schneider Electric and Trane Technologies

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

Diversification Opportunities for Schneider Electric and Trane Technologies

0.75

Correlation Coefficient

Schneider Electric  Trane Technologies

Poor diversification

The 3 months correlation between Schneider and Trane is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Trane Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trane Technologies 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 Trane Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trane Technologies plc has no effect on the direction of Schneider Electric i.e., Schneider Electric and Trane Technologies go up and down completely randomly.

Pair Corralation between Schneider Electric and Trane Technologies

Assuming the 90 days horizon Schneider Electric is expected to generate 2.07 times less return on investment than Trane Technologies. In addition to that, Schneider Electric is 1.15 times more volatile than Trane Technologies plc. It trades about 0.1 of its total potential returns per unit of risk. Trane Technologies plc is currently generating about 0.24 per unit of volatility. If you would invest  30,414  in Trane Technologies plc on April 25, 2025 and sell it today you would earn a total of  8,496  from holding Trane Technologies plc or generate 27.93% return on investment over 90 days.

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

Schneider Electric SE  vs.  Trane Technologies plc

Schneider Electric

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Schneider Electric may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Trane Technologies plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trane Technologies plc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Trane Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schneider Electric and Trane Technologies

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

The idea behind Schneider Electric SE and Trane Technologies plc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.