Correlation Between Siemens AG and Crane
Can any of the company-specific risk be diversified away by investing in both Siemens AG and Crane 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 Crane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siemens AG ADR and Crane Company, you can compare the effects of market volatilities on Siemens AG and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens AG and Crane.
Diversification Opportunities for Siemens AG and Crane
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Siemens and Crane is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG ADR and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company 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 ADR are associated (or correlated) with Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Siemens AG i.e., Siemens AG and Crane go up and down completely randomly.
Pair Corralation between Siemens AG and Crane
Assuming the 90 days horizon Siemens AG ADR is expected to generate 0.79 times more return on investment than Crane. However, Siemens AG ADR is 1.26 times less risky than Crane. It trades about 0.3 of its potential returns per unit of risk. Crane Company is currently generating about 0.05 per unit of risk. If you would invest 7,651 in Siemens AG ADR on August 27, 2024 and sell it today you would earn a total of 184.00 from holding Siemens AG ADR or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.88% |
| Values | Daily Returns |
Siemens AG ADR vs. Crane Company
Performance |
| Timeline |
| Siemens AG ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Crane Company |
Siemens AG and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens AG and Crane
The main advantage of trading using opposite Siemens AG and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens AG position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| Siemens AG vs. Sandvik AB | Siemens AG vs. Schneider Electric SA | Siemens AG vs. KONE Oyj | Siemens AG vs. Atlas Copco AB |
| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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