Correlation Between Siemens AG and ITM Power
Can any of the company-specific risk be diversified away by investing in both Siemens AG and ITM Power 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 ITM Power 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 ITM Power Plc, you can compare the effects of market volatilities on Siemens AG and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens AG and ITM Power.
Diversification Opportunities for Siemens AG and ITM Power
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Siemens and ITM is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG ADR and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Siemens AG i.e., Siemens AG and ITM Power go up and down completely randomly.
Pair Corralation between Siemens AG and ITM Power
If you would invest 7,835 in Siemens AG ADR on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Siemens AG ADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Siemens AG ADR vs. ITM Power Plc
Performance |
| Timeline |
| Siemens AG ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ITM Power Plc |
Siemens AG and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens AG and ITM Power
The main advantage of trading using opposite Siemens AG and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens AG position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power'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 |
| ITM Power vs. Dear Cashmere Holding | ITM Power vs. Goff Corp | ITM Power vs. Wialan Technologies | ITM Power vs. Cgrowth Capital |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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