Correlation Between SIEMENS AG and ARROW ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both SIEMENS AG and ARROW ELECTRONICS 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 AG and ARROW ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIEMENS AG SP and ARROW ELECTRONICS, you can compare the effects of market volatilities on SIEMENS AG and ARROW ELECTRONICS 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 AG with a short position of ARROW ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS AG and ARROW ELECTRONICS.
Diversification Opportunities for SIEMENS AG and ARROW ELECTRONICS
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SIEMENS and ARROW is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS AG SP and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS and SIEMENS AG 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 AG SP are associated (or correlated) with ARROW ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARROW ELECTRONICS has no effect on the direction of SIEMENS AG i.e., SIEMENS AG and ARROW ELECTRONICS go up and down completely randomly.
Pair Corralation between SIEMENS AG and ARROW ELECTRONICS
Assuming the 90 days trading horizon SIEMENS AG SP is expected to generate 0.79 times more return on investment than ARROW ELECTRONICS. However, SIEMENS AG SP is 1.27 times less risky than ARROW ELECTRONICS. It trades about 0.19 of its potential returns per unit of risk. ARROW ELECTRONICS is currently generating about 0.02 per unit of risk. If you would invest 8,000 in SIEMENS AG SP on September 12, 2024 and sell it today you would earn a total of 1,900 from holding SIEMENS AG SP or generate 23.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIEMENS AG SP vs. ARROW ELECTRONICS
Performance |
| Timeline |
| SIEMENS AG SP |
| ARROW ELECTRONICS |
SIEMENS AG and ARROW ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIEMENS AG and ARROW ELECTRONICS
The main advantage of trading using opposite SIEMENS AG and ARROW ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIEMENS AG position performs unexpectedly, ARROW ELECTRONICS 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 ARROW ELECTRONICS will offset losses from the drop in ARROW ELECTRONICS's long position.| SIEMENS AG vs. Brockhaus Capital Management | SIEMENS AG vs. Coor Service Management | SIEMENS AG vs. Jupiter Fund Management | SIEMENS AG vs. Harmony Gold Mining |
| ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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