Correlation Between SIEMENS AG and RATIONAL Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both SIEMENS AG and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellschaft, you can compare the effects of market volatilities on SIEMENS AG and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS AG and RATIONAL Aktiengesellscha.
Diversification Opportunities for SIEMENS AG and RATIONAL Aktiengesellscha
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SIEMENS and RATIONAL is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS AG SP and RATIONAL Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATIONAL Aktiengesellscha has no effect on the direction of SIEMENS AG i.e., SIEMENS AG and RATIONAL Aktiengesellscha go up and down completely randomly.
Pair Corralation between SIEMENS AG and RATIONAL Aktiengesellscha
Assuming the 90 days trading horizon SIEMENS AG SP is expected to generate 2.07 times more return on investment than RATIONAL Aktiengesellscha. However, SIEMENS AG is 2.07 times more volatile than RATIONAL Aktiengesellschaft. It trades about 0.08 of its potential returns per unit of risk. RATIONAL Aktiengesellschaft is currently generating about -0.19 per unit of risk. If you would invest 9,450 in SIEMENS AG SP on October 15, 2024 and sell it today you would earn a total of 250.00 from holding SIEMENS AG SP or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIEMENS AG SP vs. RATIONAL Aktiengesellschaft
Performance |
| Timeline |
| SIEMENS AG SP |
| RATIONAL Aktiengesellscha |
SIEMENS AG and RATIONAL Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIEMENS AG and RATIONAL Aktiengesellscha
The main advantage of trading using opposite SIEMENS AG and RATIONAL Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIEMENS AG position performs unexpectedly, RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha will offset losses from the drop in RATIONAL Aktiengesellscha's long position.| SIEMENS AG vs. National Retail Properties | SIEMENS AG vs. JIAHUA STORES | SIEMENS AG vs. PULSION Medical Systems | SIEMENS AG vs. SPARTAN STORES |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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