Correlation Between Graco and Siemens AG
Can any of the company-specific risk be diversified away by investing in both Graco and Siemens AG 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 Graco and Siemens AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graco Inc and Siemens AG ADR, you can compare the effects of market volatilities on Graco and Siemens AG 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 Graco with a short position of Siemens AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Siemens AG.
Diversification Opportunities for Graco and Siemens AG
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Graco and Siemens is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Siemens AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens AG ADR and Graco 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 Graco Inc are associated (or correlated) with Siemens AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens AG ADR has no effect on the direction of Graco i.e., Graco and Siemens AG go up and down completely randomly.
Pair Corralation between Graco and Siemens AG
Considering the 90-day investment horizon Graco is expected to generate 3.26 times less return on investment than Siemens AG. In addition to that, Graco is 1.02 times more volatile than Siemens AG ADR. It trades about 0.05 of its total potential returns per unit of risk. Siemens AG ADR is currently generating about 0.17 per unit of volatility. If you would invest 7,073 in Siemens AG ADR on August 26, 2024 and sell it today you would earn a total of 762.00 from holding Siemens AG ADR or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 9.26% |
| Values | Daily Returns |
Graco Inc vs. Siemens AG ADR
Performance |
| Timeline |
| Graco Inc |
| Siemens AG ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Graco and Siemens AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graco and Siemens AG
The main advantage of trading using opposite Graco and Siemens AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco position performs unexpectedly, Siemens AG 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 AG will offset losses from the drop in Siemens AG's long position.| Graco vs. Aquagold International | Graco vs. Morningstar Unconstrained Allocation | Graco vs. High Yield Municipal Fund | Graco vs. Thrivent High Yield |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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