Correlation Between Zimmer Biomet and Siemens Healthineers
Can any of the company-specific risk be diversified away by investing in both Zimmer Biomet and Siemens Healthineers 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 Zimmer Biomet and Siemens Healthineers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zimmer Biomet Holdings and Siemens Healthineers AG, you can compare the effects of market volatilities on Zimmer Biomet and Siemens Healthineers 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 Zimmer Biomet with a short position of Siemens Healthineers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimmer Biomet and Siemens Healthineers.
Diversification Opportunities for Zimmer Biomet and Siemens Healthineers
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zimmer and Siemens is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and Zimmer Biomet 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 Zimmer Biomet Holdings are associated (or correlated) with Siemens Healthineers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Healthineers has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and Siemens Healthineers go up and down completely randomly.
Pair Corralation between Zimmer Biomet and Siemens Healthineers
Considering the 90-day investment horizon Zimmer Biomet Holdings is expected to under-perform the Siemens Healthineers. But the stock apears to be less risky and, when comparing its historical volatility, Zimmer Biomet Holdings is 1.27 times less risky than Siemens Healthineers. The stock trades about -0.08 of its potential returns per unit of risk. The Siemens Healthineers AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,513 in Siemens Healthineers AG on September 12, 2024 and sell it today you would earn a total of 87.00 from holding Siemens Healthineers AG or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Zimmer Biomet Holdings vs. Siemens Healthineers AG
Performance |
| Timeline |
| Zimmer Biomet Holdings |
| Siemens Healthineers |
Zimmer Biomet and Siemens Healthineers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zimmer Biomet and Siemens Healthineers
The main advantage of trading using opposite Zimmer Biomet and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zimmer Biomet position performs unexpectedly, Siemens Healthineers 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 Healthineers will offset losses from the drop in Siemens Healthineers' long position.| Zimmer Biomet vs. Orthofix Medical | Zimmer Biomet vs. SurModics | Zimmer Biomet vs. Pulmonx Corp | Zimmer Biomet vs. CVRx Inc |
| Siemens Healthineers vs. Artivion | Siemens Healthineers vs. Anika Therapeutics | Siemens Healthineers vs. Sight Sciences | Siemens Healthineers vs. Orthofix Medical |
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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