Correlation Between Bayer AG and Siemens Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Bayer AG 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 Bayer AG and Siemens Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayer AG NA and Siemens Aktiengesellschaft, you can compare the effects of market volatilities on Bayer AG 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 Bayer AG with a short position of Siemens Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayer AG and Siemens Aktiengesellscha.
Diversification Opportunities for Bayer AG and Siemens Aktiengesellscha
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bayer and Siemens is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bayer AG NA and Siemens Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Aktiengesellscha and Bayer AG 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 Bayer AG NA 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 Bayer AG i.e., Bayer AG and Siemens Aktiengesellscha go up and down completely randomly.
Pair Corralation between Bayer AG and Siemens Aktiengesellscha
Assuming the 90 days trading horizon Bayer AG NA is expected to under-perform the Siemens Aktiengesellscha. In addition to that, Bayer AG is 2.03 times more volatile than Siemens Aktiengesellschaft. It trades about -0.34 of its total potential returns per unit of risk. Siemens Aktiengesellschaft is currently generating about -0.03 per unit of volatility. If you would invest 17,894 in Siemens Aktiengesellschaft on August 25, 2024 and sell it today you would lose (272.00) from holding Siemens Aktiengesellschaft or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bayer AG NA vs. Siemens Aktiengesellschaft
Performance |
| Timeline |
| Bayer AG NA |
| Siemens Aktiengesellscha |
Bayer AG and Siemens Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayer AG and Siemens Aktiengesellscha
The main advantage of trading using opposite Bayer AG and Siemens Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayer AG 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.| Bayer AG vs. Western Copper and | Bayer AG vs. LION ONE METALS | Bayer AG vs. ADRIATIC METALS LS 013355 | Bayer AG vs. Zijin Mining Group |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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