Correlation Between TransAlta and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both TransAlta and Siemens Energy 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 TransAlta and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAlta and Siemens Energy AG, you can compare the effects of market volatilities on TransAlta and Siemens Energy 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 TransAlta with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAlta and Siemens Energy.
Diversification Opportunities for TransAlta and Siemens Energy
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TransAlta and Siemens is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy AG and TransAlta 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 TransAlta are associated (or correlated) with Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of TransAlta i.e., TransAlta and Siemens Energy go up and down completely randomly.
Pair Corralation between TransAlta and Siemens Energy
Assuming the 90 days horizon TransAlta is expected to generate 10.95 times less return on investment than Siemens Energy. But when comparing it to its historical volatility, TransAlta is 1.12 times less risky than Siemens Energy. It trades about 0.01 of its potential returns per unit of risk. Siemens Energy AG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,180 in Siemens Energy AG on November 27, 2024 and sell it today you would earn a total of 338.00 from holding Siemens Energy AG or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
TransAlta vs. Siemens Energy AG
Performance |
| Timeline |
| TransAlta |
| Siemens Energy AG |
TransAlta and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAlta and Siemens Energy
The main advantage of trading using opposite TransAlta and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta position performs unexpectedly, Siemens Energy 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 Siemens Energy will offset losses from the drop in Siemens Energy's long position.| TransAlta vs. De Grey Mining | TransAlta vs. Harmony Gold Mining | TransAlta vs. East Africa Metals | TransAlta vs. GALENA MINING LTD |
| Siemens Energy vs. OPKO HEALTH | Siemens Energy vs. Molina Healthcare | Siemens Energy vs. Cardinal Health | Siemens Energy vs. Canadian Utilities Limited |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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