Correlation Between Siemens Energy and MAG SILVER

Can any of the company-specific risk be diversified away by investing in both Siemens Energy and MAG SILVER 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 MAG SILVER 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 MAG SILVER, you can compare the effects of market volatilities on Siemens Energy and MAG SILVER 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 MAG SILVER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens Energy and MAG SILVER.

Diversification Opportunities for Siemens Energy and MAG SILVER

-0.65

Correlation Coefficient

Siemens Energy  MAG SILVER

Excellent diversification

The 3 months correlation between Siemens and MAG is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Energy AG and MAG SILVER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG SILVER 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 MAG SILVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG SILVER has no effect on the direction of Siemens Energy i.e., Siemens Energy and MAG SILVER go up and down completely randomly.

Pair Corralation between Siemens Energy and MAG SILVER

Assuming the 90 days trading horizon Siemens Energy AG is expected to generate 1.56 times more return on investment than MAG SILVER. However, Siemens Energy is 1.56 times more volatile than MAG SILVER. It trades about 0.18 of its potential returns per unit of risk. MAG SILVER is currently generating about -0.07 per unit of risk. If you would invest  3,700  in Siemens Energy AG on October 24, 2024 and sell it today you would earn a total of  1,476  from holding Siemens Energy AG or generate 39.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Siemens Energy AG  vs.  MAG SILVER

Siemens Energy AG

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Energy AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Siemens Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

MAG SILVER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAG SILVER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Siemens Energy and MAG SILVER

The main advantage of trading using opposite Siemens Energy and MAG SILVER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens Energy position performs unexpectedly, MAG SILVER 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 MAG SILVER will offset losses from the drop in MAG SILVER's long position.

The idea behind Siemens Energy AG and MAG SILVER 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.