Correlation Between Danaher and SIEMENS HEALTH
Can any of the company-specific risk be diversified away by investing in both Danaher and SIEMENS HEALTH 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 Danaher and SIEMENS HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danaher and SIEMENS HEALTH ADR050, you can compare the effects of market volatilities on Danaher and SIEMENS HEALTH 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 Danaher with a short position of SIEMENS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaher and SIEMENS HEALTH.
Diversification Opportunities for Danaher and SIEMENS HEALTH
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Danaher and SIEMENS is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Danaher and SIEMENS HEALTH ADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS HEALTH ADR050 and Danaher 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 Danaher are associated (or correlated) with SIEMENS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEMENS HEALTH ADR050 has no effect on the direction of Danaher i.e., Danaher and SIEMENS HEALTH go up and down completely randomly.
Pair Corralation between Danaher and SIEMENS HEALTH
Assuming the 90 days trading horizon Danaher is expected to generate 0.77 times more return on investment than SIEMENS HEALTH. However, Danaher is 1.3 times less risky than SIEMENS HEALTH. It trades about 0.04 of its potential returns per unit of risk. SIEMENS HEALTH ADR050 is currently generating about 0.01 per unit of risk. If you would invest 20,058 in Danaher on September 3, 2024 and sell it today you would earn a total of 2,812 from holding Danaher or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danaher vs. SIEMENS HEALTH ADR050
Performance |
| Timeline |
| Danaher |
| SIEMENS HEALTH ADR050 |
Danaher and SIEMENS HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danaher and SIEMENS HEALTH
The main advantage of trading using opposite Danaher and SIEMENS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher position performs unexpectedly, SIEMENS HEALTH 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 HEALTH will offset losses from the drop in SIEMENS HEALTH's long position.| Danaher vs. Thermo Fisher Scientific | Danaher vs. Danaher | Danaher vs. SIEMENS HEALTH ADR050 | Danaher vs. DexCom Inc |
| SIEMENS HEALTH vs. Thermo Fisher Scientific | SIEMENS HEALTH vs. Danaher | SIEMENS HEALTH vs. Danaher | SIEMENS HEALTH vs. DexCom Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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