Correlation Between MTI WIRELESS and SIEMENS AG

Can any of the company-specific risk be diversified away by investing in both MTI WIRELESS 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 MTI WIRELESS and SIEMENS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MTI WIRELESS EDGE and SIEMENS AG SP, you can compare the effects of market volatilities on MTI WIRELESS 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 MTI WIRELESS with a short position of SIEMENS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI WIRELESS and SIEMENS AG.

Diversification Opportunities for MTI WIRELESS and SIEMENS AG

0.01

Correlation Coefficient

MTI WIRELESS  SIEMENS AG

Significant diversification

The 3 months correlation between MTI and SIEMENS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and SIEMENS AG SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS AG SP and MTI WIRELESS 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 MTI WIRELESS EDGE 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 SP has no effect on the direction of MTI WIRELESS i.e., MTI WIRELESS and SIEMENS AG go up and down completely randomly.

Pair Corralation between MTI WIRELESS and SIEMENS AG

Assuming the 90 days horizon MTI WIRELESS EDGE is expected to under-perform the SIEMENS AG. In addition to that, MTI WIRELESS is 1.05 times more volatile than SIEMENS AG SP. It trades about -0.14 of its total potential returns per unit of risk. SIEMENS AG SP is currently generating about 0.02 per unit of volatility. If you would invest  8,900  in SIEMENS AG SP on September 4, 2024 and sell it today you would earn a total of  50.00  from holding SIEMENS AG SP or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

MTI WIRELESS EDGE  vs.  SIEMENS AG SP

MTI WIRELESS EDGE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MTI WIRELESS EDGE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MTI WIRELESS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SIEMENS AG SP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIEMENS AG SP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, SIEMENS AG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MTI WIRELESS and SIEMENS AG

The main advantage of trading using opposite MTI WIRELESS and SIEMENS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS 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.

The idea behind MTI WIRELESS EDGE and SIEMENS AG SP 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.