Correlation Between Siemens AG and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both Siemens AG and Vestas Wind 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 Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siemens AG Class and Vestas Wind Systems, you can compare the effects of market volatilities on Siemens AG and Vestas Wind 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 Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens AG and Vestas Wind.
Diversification Opportunities for Siemens AG and Vestas Wind
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Siemens and Vestas is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG Class and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems 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 Class are associated (or correlated) with Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Siemens AG i.e., Siemens AG and Vestas Wind go up and down completely randomly.
Pair Corralation between Siemens AG and Vestas Wind
Assuming the 90 days horizon Siemens AG Class is expected to generate 0.53 times more return on investment than Vestas Wind. However, Siemens AG Class is 1.89 times less risky than Vestas Wind. It trades about -0.04 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.31 per unit of risk. If you would invest 19,395 in Siemens AG Class on August 29, 2024 and sell it today you would lose (479.00) from holding Siemens AG Class or give up 2.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siemens AG Class vs. Vestas Wind Systems
Performance |
| Timeline |
| Siemens AG Class |
| Vestas Wind Systems |
Siemens AG and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens AG and Vestas Wind
The main advantage of trading using opposite Siemens AG and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens AG position performs unexpectedly, Vestas Wind 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 Vestas Wind will offset losses from the drop in Vestas Wind's long position.| Siemens AG vs. Shapeways Holdings, Common | Siemens AG vs. JE Cleantech Holdings | Siemens AG vs. Greenland Acquisition Corp | Siemens AG vs. Laser Photonics |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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