Correlation Between Abbott Laboratories and Siemens Healthineers
Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and Siemens Healthineers 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 Abbott Laboratories and Siemens Healthineers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbott Laboratories and Siemens Healthineers AG, you can compare the effects of market volatilities on Abbott Laboratories and Siemens Healthineers 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 Abbott Laboratories with a short position of Siemens Healthineers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Siemens Healthineers.
Diversification Opportunities for Abbott Laboratories and Siemens Healthineers
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Abbott and Siemens is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and Abbott Laboratories 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 Abbott Laboratories are associated (or correlated) with Siemens Healthineers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Healthineers has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Siemens Healthineers go up and down completely randomly.
Pair Corralation between Abbott Laboratories and Siemens Healthineers
Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.72 times more return on investment than Siemens Healthineers. However, Abbott Laboratories is 1.4 times less risky than Siemens Healthineers. It trades about 0.15 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.08 per unit of risk. If you would invest 11,445 in Abbott Laboratories on August 31, 2024 and sell it today you would earn a total of 450.00 from holding Abbott Laboratories or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abbott Laboratories vs. Siemens Healthineers AG
Performance |
| Timeline |
| Abbott Laboratories |
| Siemens Healthineers |
Abbott Laboratories and Siemens Healthineers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abbott Laboratories and Siemens Healthineers
The main advantage of trading using opposite Abbott Laboratories and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, Siemens Healthineers 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 Healthineers will offset losses from the drop in Siemens Healthineers' long position.| Abbott Laboratories vs. AbbVie Inc | Abbott Laboratories vs. Eli Lilly and | Abbott Laboratories vs. Bristol Myers Squibb | Abbott Laboratories vs. Johnson Johnson |
| Siemens Healthineers vs. Sonova Holding AG | Siemens Healthineers vs. Medtronic PLC | Siemens Healthineers vs. CONMED | Siemens Healthineers vs. Glaukos Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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