Correlation Between CENTRICA ADR and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both CENTRICA ADR 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 CENTRICA ADR and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CENTRICA ADR NEW and Siemens Energy AG, you can compare the effects of market volatilities on CENTRICA ADR 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 CENTRICA ADR with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTRICA ADR and Siemens Energy.
Diversification Opportunities for CENTRICA ADR and Siemens Energy
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CENTRICA and Siemens is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CENTRICA ADR NEW 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 CENTRICA ADR 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 CENTRICA ADR NEW 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 CENTRICA ADR i.e., CENTRICA ADR and Siemens Energy go up and down completely randomly.
Pair Corralation between CENTRICA ADR and Siemens Energy
Assuming the 90 days trading horizon CENTRICA ADR NEW is expected to under-perform the Siemens Energy. But the stock apears to be less risky and, when comparing its historical volatility, CENTRICA ADR NEW is 1.28 times less risky than Siemens Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Siemens Energy AG is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,391 in Siemens Energy AG on September 3, 2024 and sell it today you would earn a total of 2,717 from holding Siemens Energy AG or generate 113.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CENTRICA ADR NEW vs. Siemens Energy AG
Performance |
| Timeline |
| CENTRICA ADR NEW |
| Siemens Energy AG |
CENTRICA ADR and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CENTRICA ADR and Siemens Energy
The main advantage of trading using opposite CENTRICA ADR and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTRICA ADR 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.| CENTRICA ADR vs. CeoTronics AG | CENTRICA ADR vs. MOLSON RS BEVERAGE | CENTRICA ADR vs. EPSILON HEALTHCARE LTD | CENTRICA ADR vs. Collins Foods Limited |
| Siemens Energy vs. CENTRICA ADR NEW | Siemens Energy vs. Superior Plus Corp | Siemens Energy vs. NMI Holdings | Siemens Energy vs. Origin Agritech |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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