Correlation Between SIEMENS AG and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both SIEMENS AG and Siemens Energy 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 Siemens Energy 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 Siemens Energy AG, you can compare the effects of market volatilities on SIEMENS AG and Siemens Energy 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 Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS AG and Siemens Energy.
Diversification Opportunities for SIEMENS AG and Siemens Energy
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SIEMENS and Siemens is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS AG SP and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy 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 Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of SIEMENS AG i.e., SIEMENS AG and Siemens Energy go up and down completely randomly.
Pair Corralation between SIEMENS AG and Siemens Energy
Assuming the 90 days trading horizon SIEMENS AG is expected to generate 2.87 times less return on investment than Siemens Energy. But when comparing it to its historical volatility, SIEMENS AG SP is 1.93 times less risky than Siemens Energy. It trades about 0.05 of its potential returns per unit of risk. Siemens Energy AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,903 in Siemens Energy AG on October 13, 2024 and sell it today you would earn a total of 3,047 from holding Siemens Energy AG or generate 160.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIEMENS AG SP vs. Siemens Energy AG
Performance |
| Timeline |
| SIEMENS AG SP |
| Siemens Energy AG |
SIEMENS AG and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIEMENS AG and Siemens Energy
The main advantage of trading using opposite SIEMENS AG and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIEMENS AG position performs unexpectedly, Siemens Energy 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 Energy will offset losses from the drop in Siemens Energy's long position.| SIEMENS AG vs. CALTAGIRONE EDITORE | SIEMENS AG vs. Sch Environnement SA | SIEMENS AG vs. BG Foods | SIEMENS AG vs. Tianjin Capital Environmental |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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