Correlation Between Vestas Wind and Siemens AG
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Siemens AG 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 Vestas Wind and Siemens AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestas Wind Systems and Siemens AG Class, you can compare the effects of market volatilities on Vestas Wind and Siemens AG 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 Vestas Wind with a short position of Siemens AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Siemens AG.
Diversification Opportunities for Vestas Wind and Siemens AG
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vestas and Siemens is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Siemens AG Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens AG Class and Vestas Wind 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 Vestas Wind Systems are associated (or correlated) with Siemens AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens AG Class has no effect on the direction of Vestas Wind i.e., Vestas Wind and Siemens AG go up and down completely randomly.
Pair Corralation between Vestas Wind and Siemens AG
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the Siemens AG. In addition to that, Vestas Wind is 1.09 times more volatile than Siemens AG Class. It trades about -0.36 of its total potential returns per unit of risk. Siemens AG Class is currently generating about -0.12 per unit of volatility. If you would invest 19,277 in Siemens AG Class on January 20, 2024 and sell it today you would lose (686.00) from holding Siemens AG Class or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Siemens AG Class
Performance |
| Timeline |
| Vestas Wind Systems |
| Siemens AG Class |
Vestas Wind and Siemens AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Siemens AG
The main advantage of trading using opposite Vestas Wind and Siemens AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Siemens AG 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 AG will offset losses from the drop in Siemens AG's long position.| Vestas Wind vs. GE Aerospace | Vestas Wind vs. Eaton PLC | Vestas Wind vs. Illinois Tool Works | Vestas Wind vs. Parker Hannifin |
| Siemens AG vs. GE Aerospace | Siemens AG vs. Eaton PLC | Siemens AG vs. Illinois Tool Works | Siemens AG vs. Parker Hannifin |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |