Correlation Between Siemens Energy and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Siemens Energy and Insurance Australia 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 Siemens Energy and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siemens Energy AG and Insurance Australia Group, you can compare the effects of market volatilities on Siemens Energy and Insurance Australia 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 Siemens Energy with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens Energy and Insurance Australia.
Diversification Opportunities for Siemens Energy and Insurance Australia
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Siemens and Insurance is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Energy AG and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Siemens Energy 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 Siemens Energy AG are associated (or correlated) with Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Siemens Energy i.e., Siemens Energy and Insurance Australia go up and down completely randomly.
Pair Corralation between Siemens Energy and Insurance Australia
Assuming the 90 days trading horizon Siemens Energy AG is expected to under-perform the Insurance Australia. In addition to that, Siemens Energy is 1.85 times more volatile than Insurance Australia Group. It trades about -0.07 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.05 per unit of volatility. If you would invest 500.00 in Insurance Australia Group on October 16, 2024 and sell it today you would earn a total of 5.00 from holding Insurance Australia Group or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siemens Energy AG vs. Insurance Australia Group
Performance |
| Timeline |
| Siemens Energy AG |
| Insurance Australia |
Siemens Energy and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens Energy and Insurance Australia
The main advantage of trading using opposite Siemens Energy and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens Energy position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| Siemens Energy vs. Insurance Australia Group | Siemens Energy vs. VIENNA INSURANCE GR | Siemens Energy vs. Japan Post Insurance | Siemens Energy vs. Singapore Telecommunications Limited |
| Insurance Australia vs. SEI INVESTMENTS | Insurance Australia vs. Safety Insurance Group | Insurance Australia vs. JLF INVESTMENT | Insurance Australia vs. MEDCAW INVESTMENTS LS 01 |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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