Correlation Between Otis Worldwide and Siemens Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Otis Worldwide and Siemens Aktiengesellscha 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 Otis Worldwide and Siemens Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otis Worldwide Corp and Siemens Aktiengesellschaft, you can compare the effects of market volatilities on Otis Worldwide and Siemens Aktiengesellscha 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 Otis Worldwide with a short position of Siemens Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otis Worldwide and Siemens Aktiengesellscha.
Diversification Opportunities for Otis Worldwide and Siemens Aktiengesellscha
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Otis and Siemens is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Otis Worldwide Corp and Siemens Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Aktiengesellscha and Otis Worldwide 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 Otis Worldwide Corp are associated (or correlated) with Siemens Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Aktiengesellscha has no effect on the direction of Otis Worldwide i.e., Otis Worldwide and Siemens Aktiengesellscha go up and down completely randomly.
Pair Corralation between Otis Worldwide and Siemens Aktiengesellscha
Assuming the 90 days horizon Otis Worldwide is expected to generate 54.05 times less return on investment than Siemens Aktiengesellscha. But when comparing it to its historical volatility, Otis Worldwide Corp is 2.4 times less risky than Siemens Aktiengesellscha. It trades about 0.01 of its potential returns per unit of risk. Siemens Aktiengesellschaft is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 18,584 in Siemens Aktiengesellschaft on September 12, 2024 and sell it today you would earn a total of 968.00 from holding Siemens Aktiengesellschaft or generate 5.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Otis Worldwide Corp vs. Siemens Aktiengesellschaft
Performance |
| Timeline |
| Otis Worldwide Corp |
| Siemens Aktiengesellscha |
Otis Worldwide and Siemens Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otis Worldwide and Siemens Aktiengesellscha
The main advantage of trading using opposite Otis Worldwide and Siemens Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otis Worldwide position performs unexpectedly, Siemens Aktiengesellscha 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 Siemens Aktiengesellscha will offset losses from the drop in Siemens Aktiengesellscha's long position.| Otis Worldwide vs. Astral Foods Limited | Otis Worldwide vs. United Natural Foods | Otis Worldwide vs. HK Electric Investments | Otis Worldwide vs. MOLSON RS BEVERAGE |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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