Correlation Between CDN IMPERIAL and Siemens Healthineers

Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL 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 CDN IMPERIAL and Siemens Healthineers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CDN IMPERIAL BANK and Siemens Healthineers AG, you can compare the effects of market volatilities on CDN IMPERIAL 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 CDN IMPERIAL with a short position of Siemens Healthineers. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Siemens Healthineers.

Diversification Opportunities for CDN IMPERIAL and Siemens Healthineers

0.08

Correlation Coefficient

CDN IMPERIAL  Siemens Healthineers

Significant diversification

The 3 months correlation between CDN and Siemens is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and CDN IMPERIAL 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 CDN IMPERIAL BANK 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 CDN IMPERIAL i.e., CDN IMPERIAL and Siemens Healthineers go up and down completely randomly.

Pair Corralation between CDN IMPERIAL and Siemens Healthineers

Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 1.02 times more return on investment than Siemens Healthineers. However, CDN IMPERIAL is 1.02 times more volatile than Siemens Healthineers AG. It trades about -0.14 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about -0.19 per unit of risk. If you would invest  6,290  in CDN IMPERIAL BANK on October 12, 2024 and sell it today you would lose (167.00) from holding CDN IMPERIAL BANK or give up 2.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CDN IMPERIAL BANK  vs.  Siemens Healthineers AG

CDN IMPERIAL BANK

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CDN IMPERIAL BANK are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, CDN IMPERIAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Siemens Healthineers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siemens Healthineers AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Siemens Healthineers is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CDN IMPERIAL and Siemens Healthineers

The main advantage of trading using opposite CDN IMPERIAL and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL 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.

The idea behind CDN IMPERIAL BANK and Siemens Healthineers AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.