Correlation Between NYSE Composite and Siemens AG
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Siemens AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Siemens AG ADR, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Siemens AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Siemens AG.
Diversification Opportunities for NYSE Composite and Siemens AG
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Siemens is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Siemens AG go up and down completely randomly.
Pair Corralation between NYSE Composite and Siemens AG
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.43 times less return on investment than Siemens AG. But when comparing it to its historical volatility, NYSE Composite is 1.68 times less risky than Siemens AG. It trades about 0.08 of its potential returns per unit of risk. Siemens AG ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,725 in Siemens AG ADR on September 3, 2024 and sell it today you would earn a total of 110.00 from holding Siemens AG ADR or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.21% |
| Values | Daily Returns |
NYSE Composite vs. Siemens AG ADR
Performance |
| Timeline |
NYSE Composite and Siemens AG Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Siemens AG ADR
Pair trading matchups for Siemens AG
Pair Trading with NYSE Composite and Siemens AG
The main advantage of trading using opposite NYSE Composite and Siemens AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Siemens AG vs. Sandvik AB | Siemens AG vs. Schneider Electric SA | Siemens AG vs. KONE Oyj | Siemens AG vs. Atlas Copco AB |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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