Correlation Between Siemens Energy and SPX Corp
Can any of the company-specific risk be diversified away by investing in both Siemens Energy and SPX Corp 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 Energy and SPX Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siemens Energy AG and SPX Corp, you can compare the effects of market volatilities on Siemens Energy and SPX Corp 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 Energy with a short position of SPX Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens Energy and SPX Corp.
Diversification Opportunities for Siemens Energy and SPX Corp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Siemens and SPX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Energy AG and SPX Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPX Corp and Siemens Energy 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 Energy AG are associated (or correlated) with SPX Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPX Corp has no effect on the direction of Siemens Energy i.e., Siemens Energy and SPX Corp go up and down completely randomly.
Pair Corralation between Siemens Energy and SPX Corp
Assuming the 90 days horizon Siemens Energy AG is expected to generate 0.84 times more return on investment than SPX Corp. However, Siemens Energy AG is 1.19 times less risky than SPX Corp. It trades about 0.38 of its potential returns per unit of risk. SPX Corp is currently generating about 0.1 per unit of risk. If you would invest 3,678 in Siemens Energy AG on August 30, 2024 and sell it today you would earn a total of 1,477 from holding Siemens Energy AG or generate 40.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siemens Energy AG vs. SPX Corp
Performance |
| Timeline |
| Siemens Energy AG |
| SPX Corp |
Siemens Energy and SPX Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens Energy and SPX Corp
The main advantage of trading using opposite Siemens Energy and SPX Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens Energy position performs unexpectedly, SPX Corp 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 SPX Corp will offset losses from the drop in SPX Corp's long position.| Siemens Energy vs. SPX Corp | Siemens Energy vs. Nuscale Power Corp | Siemens Energy vs. Vestas Wind Systems | Siemens Energy vs. Nordex SE |
| SPX Corp vs. Standex International | SPX Corp vs. Enpro Industries | SPX Corp vs. Thermon Group Holdings | SPX Corp vs. Enerpac Tool Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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