Correlation Between SIEMENS HEALTH and Thermo Fisher
Can any of the company-specific risk be diversified away by investing in both SIEMENS HEALTH and Thermo Fisher 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 Thermo Fisher 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 Thermo Fisher Scientific, you can compare the effects of market volatilities on SIEMENS HEALTH and Thermo Fisher 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 Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS HEALTH and Thermo Fisher.
Diversification Opportunities for SIEMENS HEALTH and Thermo Fisher
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SIEMENS and Thermo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS HEALTH ADR050 and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific 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 Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of SIEMENS HEALTH i.e., SIEMENS HEALTH and Thermo Fisher go up and down completely randomly.
Pair Corralation between SIEMENS HEALTH and Thermo Fisher
Assuming the 90 days trading horizon SIEMENS HEALTH ADR050 is expected to generate 1.33 times more return on investment than Thermo Fisher. However, SIEMENS HEALTH is 1.33 times more volatile than Thermo Fisher Scientific. It trades about -0.07 of its potential returns per unit of risk. Thermo Fisher Scientific is currently generating about -0.1 per unit of risk. If you would invest 2,700 in SIEMENS HEALTH ADR050 on September 12, 2024 and sell it today you would lose (180.00) from holding SIEMENS HEALTH ADR050 or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIEMENS HEALTH ADR050 vs. Thermo Fisher Scientific
Performance |
| Timeline |
| SIEMENS HEALTH ADR050 |
| Thermo Fisher Scientific |
SIEMENS HEALTH and Thermo Fisher Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIEMENS HEALTH and Thermo Fisher
The main advantage of trading using opposite SIEMENS HEALTH and Thermo Fisher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIEMENS HEALTH position performs unexpectedly, Thermo Fisher 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 Thermo Fisher will offset losses from the drop in Thermo Fisher's long position.| SIEMENS HEALTH vs. Datang International Power | SIEMENS HEALTH vs. CDN IMPERIAL BANK | SIEMENS HEALTH vs. Pure Storage | SIEMENS HEALTH vs. Public Storage |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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