Correlation Between Microsoft and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Siemens Energy AG, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Siemens Energy.
Diversification Opportunities for Microsoft and Siemens Energy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and Siemens is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Siemens Energy go up and down completely randomly.
Pair Corralation between Microsoft and Siemens Energy
Assuming the 90 days trading horizon Microsoft is expected to generate 2.46 times less return on investment than Siemens Energy. But when comparing it to its historical volatility, Microsoft is 2.44 times less risky than Siemens Energy. It trades about 0.08 of its potential returns per unit of risk. Siemens Energy AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,886 in Siemens Energy AG on September 1, 2024 and sell it today you would earn a total of 3,222 from holding Siemens Energy AG or generate 170.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Siemens Energy AG
Performance |
| Timeline |
| Microsoft |
| Siemens Energy AG |
Microsoft and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Siemens Energy
The main advantage of trading using opposite Microsoft and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Coeur Mining | Microsoft vs. MINCO SILVER | Microsoft vs. MAGNUM MINING EXP | Microsoft vs. Perseus Mining Limited |
| Siemens Energy vs. CENTRICA ADR NEW | Siemens Energy vs. TransAlta | Siemens Energy vs. Superior Plus Corp | Siemens Energy vs. NMI 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |