Correlation Between Broadwind and SIEMENS AG
Can any of the company-specific risk be diversified away by investing in both Broadwind and SIEMENS AG 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 Broadwind and SIEMENS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind and SIEMENS AG SP, you can compare the effects of market volatilities on Broadwind and SIEMENS AG 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 Broadwind with a short position of SIEMENS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and SIEMENS AG.
Diversification Opportunities for Broadwind and SIEMENS AG
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Broadwind and SIEMENS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and SIEMENS AG SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS AG SP and Broadwind 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 Broadwind are associated (or correlated) with SIEMENS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEMENS AG SP has no effect on the direction of Broadwind i.e., Broadwind and SIEMENS AG go up and down completely randomly.
Pair Corralation between Broadwind and SIEMENS AG
Assuming the 90 days trading horizon Broadwind is expected to generate 1.68 times less return on investment than SIEMENS AG. In addition to that, Broadwind is 2.69 times more volatile than SIEMENS AG SP. It trades about 0.01 of its total potential returns per unit of risk. SIEMENS AG SP is currently generating about 0.04 per unit of volatility. If you would invest 7,808 in SIEMENS AG SP on September 4, 2024 and sell it today you would earn a total of 1,142 from holding SIEMENS AG SP or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Broadwind vs. SIEMENS AG SP
Performance |
| Timeline |
| Broadwind |
| SIEMENS AG SP |
Broadwind and SIEMENS AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadwind and SIEMENS AG
The main advantage of trading using opposite Broadwind and SIEMENS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind position performs unexpectedly, SIEMENS AG 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 AG will offset losses from the drop in SIEMENS AG's long position.| Broadwind vs. MINCO SILVER | Broadwind vs. Ming Le Sports | Broadwind vs. GRIFFIN MINING LTD | Broadwind vs. CI GAMES SA |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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