Correlation Between SIEMENS HEALTH and Siemens Healthineers
Can any of the company-specific risk be diversified away by investing in both SIEMENS HEALTH and Siemens Healthineers 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 HEALTH and Siemens Healthineers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIEMENS HEALTH ADR050 and Siemens Healthineers AG, you can compare the effects of market volatilities on SIEMENS HEALTH and Siemens Healthineers 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 HEALTH with a short position of Siemens Healthineers. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS HEALTH and Siemens Healthineers.
Diversification Opportunities for SIEMENS HEALTH and Siemens Healthineers
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SIEMENS and Siemens is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS HEALTH ADR050 and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and SIEMENS HEALTH 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 HEALTH ADR050 are associated (or correlated) with Siemens Healthineers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Healthineers has no effect on the direction of SIEMENS HEALTH i.e., SIEMENS HEALTH and Siemens Healthineers go up and down completely randomly.
Pair Corralation between SIEMENS HEALTH and Siemens Healthineers
Assuming the 90 days trading horizon SIEMENS HEALTH ADR050 is expected to generate 1.71 times more return on investment than Siemens Healthineers. However, SIEMENS HEALTH is 1.71 times more volatile than Siemens Healthineers AG. It trades about 0.08 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.12 per unit of risk. If you would invest 2,480 in SIEMENS HEALTH ADR050 on September 27, 2024 and sell it today you would earn a total of 60.00 from holding SIEMENS HEALTH ADR050 or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIEMENS HEALTH ADR050 vs. Siemens Healthineers AG
Performance |
| Timeline |
| SIEMENS HEALTH ADR050 |
| Siemens Healthineers |
SIEMENS HEALTH and Siemens Healthineers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIEMENS HEALTH and Siemens Healthineers
The main advantage of trading using opposite SIEMENS HEALTH and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIEMENS HEALTH position performs unexpectedly, Siemens Healthineers 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 Healthineers will offset losses from the drop in Siemens Healthineers' long position.| SIEMENS HEALTH vs. WuXi AppTec Co | SIEMENS HEALTH vs. Danaher | SIEMENS HEALTH vs. Danaher | SIEMENS HEALTH vs. Siemens Healthineers AG |
| Siemens Healthineers vs. WuXi AppTec Co | Siemens Healthineers vs. Danaher | Siemens Healthineers vs. Danaher | Siemens Healthineers vs. SIEMENS HEALTH ADR050 |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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