Correlation Between American Homes and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both American Homes and Siemens Energy 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 American Homes and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and Siemens Energy AG, you can compare the effects of market volatilities on American Homes and Siemens Energy 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 American Homes with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Siemens Energy.
Diversification Opportunities for American Homes and Siemens Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Siemens is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy AG and American Homes 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 American Homes 4 are associated (or correlated) with Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of American Homes i.e., American Homes and Siemens Energy go up and down completely randomly.
Pair Corralation between American Homes and Siemens Energy
Assuming the 90 days trading horizon American Homes is expected to generate 3.89 times less return on investment than Siemens Energy. But when comparing it to its historical volatility, American Homes 4 is 2.13 times less risky than Siemens Energy. It trades about 0.04 of its potential returns per unit of risk. Siemens Energy AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,756 in Siemens Energy AG on September 24, 2024 and sell it today you would earn a total of 3,314 from holding Siemens Energy AG or generate 188.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. Siemens Energy AG
Performance |
| Timeline |
| American Homes 4 |
| Siemens Energy AG |
American Homes and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Siemens Energy
The main advantage of trading using opposite American Homes and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Siemens Energy 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 Energy will offset losses from the drop in Siemens Energy's long position.| American Homes vs. Fevertree Drinks PLC | American Homes vs. MAGNUM MINING EXP | American Homes vs. United Breweries Co | American Homes vs. THAI BEVERAGE |
| Siemens Energy vs. LANDSEA HOMES P | Siemens Energy vs. Taylor Morrison Home | Siemens Energy vs. American Homes 4 | Siemens Energy vs. Autohome ADR |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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