Correlation Between SIEMENS AG and Deutz AG
Can any of the company-specific risk be diversified away by investing in both SIEMENS AG and Deutz 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 SIEMENS AG and Deutz AG 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 Deutz AG, you can compare the effects of market volatilities on SIEMENS AG and Deutz 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 SIEMENS AG with a short position of Deutz AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS AG and Deutz AG.
Diversification Opportunities for SIEMENS AG and Deutz AG
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIEMENS and Deutz is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS AG SP and Deutz AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutz AG 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 Deutz AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutz AG has no effect on the direction of SIEMENS AG i.e., SIEMENS AG and Deutz AG go up and down completely randomly.
Pair Corralation between SIEMENS AG and Deutz AG
Assuming the 90 days trading horizon SIEMENS AG SP is expected to generate 0.82 times more return on investment than Deutz AG. However, SIEMENS AG SP is 1.22 times less risky than Deutz AG. It trades about 0.19 of its potential returns per unit of risk. Deutz AG is currently generating about -0.03 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIEMENS AG SP vs. Deutz AG
Performance |
| Timeline |
| SIEMENS AG SP |
| Deutz AG |
SIEMENS AG and Deutz AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIEMENS AG and Deutz AG
The main advantage of trading using opposite SIEMENS AG and Deutz AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIEMENS AG position performs unexpectedly, Deutz 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 Deutz AG will offset losses from the drop in Deutz AG'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 |
| Deutz AG vs. Entravision Communications | Deutz AG vs. CNVISION MEDIA | Deutz AG vs. Seven West Media | Deutz AG vs. Computershare Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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