Correlation Between Siemens Healthineers and Medtronic PLC
Can any of the company-specific risk be diversified away by investing in both Siemens Healthineers and Medtronic PLC 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 Healthineers and Medtronic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siemens Healthineers AG and Medtronic PLC, you can compare the effects of market volatilities on Siemens Healthineers and Medtronic PLC 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 Healthineers with a short position of Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens Healthineers and Medtronic PLC.
Diversification Opportunities for Siemens Healthineers and Medtronic PLC
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Siemens and Medtronic is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC and Siemens Healthineers 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 Healthineers AG are associated (or correlated) with Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and Medtronic PLC go up and down completely randomly.
Pair Corralation between Siemens Healthineers and Medtronic PLC
Assuming the 90 days trading horizon Siemens Healthineers AG is expected to generate 1.29 times more return on investment than Medtronic PLC. However, Siemens Healthineers is 1.29 times more volatile than Medtronic PLC. It trades about 0.16 of its potential returns per unit of risk. Medtronic PLC is currently generating about -0.22 per unit of risk. If you would invest 5,060 in Siemens Healthineers AG on September 25, 2024 and sell it today you would earn a total of 150.00 from holding Siemens Healthineers AG or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Siemens Healthineers AG vs. Medtronic PLC
Performance |
| Timeline |
| Siemens Healthineers |
| Medtronic PLC |
Siemens Healthineers and Medtronic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens Healthineers and Medtronic PLC
The main advantage of trading using opposite Siemens Healthineers and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens Healthineers position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.| Siemens Healthineers vs. Abbott Laboratories | Siemens Healthineers vs. Medtronic PLC | Siemens Healthineers vs. Stryker | Siemens Healthineers vs. Boston Scientific |
| Medtronic PLC vs. Abbott Laboratories | Medtronic PLC vs. Stryker | Medtronic PLC vs. Boston Scientific | Medtronic PLC vs. Siemens Healthineers AG |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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