Correlation Between Generac Holdings and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both Generac Holdings 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 Generac Holdings and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generac Holdings and Siemens Energy AG, you can compare the effects of market volatilities on Generac Holdings 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 Generac Holdings with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generac Holdings and Siemens Energy.
Diversification Opportunities for Generac Holdings and Siemens Energy
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Generac and Siemens is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Generac Holdings 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 Generac Holdings 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 Generac Holdings 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 Generac Holdings i.e., Generac Holdings and Siemens Energy go up and down completely randomly.
Pair Corralation between Generac Holdings and Siemens Energy
Given the investment horizon of 90 days Generac Holdings is expected to generate 1.55 times less return on investment than Siemens Energy. But when comparing it to its historical volatility, Generac Holdings is 1.48 times less risky than Siemens Energy. It trades about 0.33 of its potential returns per unit of risk. Siemens Energy AG is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 4,150 in Siemens Energy AG on August 31, 2024 and sell it today you would earn a total of 1,008 from holding Siemens Energy AG or generate 24.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Generac Holdings vs. Siemens Energy AG
Performance |
| Timeline |
| Generac Holdings |
| Siemens Energy AG |
Generac Holdings and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Generac Holdings and Siemens Energy
The main advantage of trading using opposite Generac Holdings and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generac Holdings 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.| Generac Holdings vs. Emerson Electric | Generac Holdings vs. Eaton PLC | Generac Holdings vs. Parker Hannifin | Generac Holdings vs. Illinois Tool Works |
| Siemens Energy vs. Schneider Electric SE | Siemens Energy vs. Vestas Wind Systems | Siemens Energy vs. Hillenbrand | Siemens Energy vs. Generac Holdings |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |