Correlation Between Siemens Healthineers and American Eagle

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

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

Diversification Opportunities for Siemens Healthineers and American Eagle

-0.23

Correlation Coefficient

Siemens Healthineers  American Eagle

Very good diversification

The 3 months correlation between Siemens and American is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters and Siemens Healthineers 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 Healthineers AG are associated (or correlated) with American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and American Eagle go up and down completely randomly.

Pair Corralation between Siemens Healthineers and American Eagle

Assuming the 90 days horizon Siemens Healthineers AG is expected to generate 0.48 times more return on investment than American Eagle. However, Siemens Healthineers AG is 2.11 times less risky than American Eagle. It trades about 0.05 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.19 per unit of risk. If you would invest  5,130  in Siemens Healthineers AG on December 21, 2024 and sell it today you would earn a total of  182.00  from holding Siemens Healthineers AG or generate 3.55% return on investment over 90 days.

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

Siemens Healthineers AG  vs.  American Eagle Outfitters

Siemens Healthineers

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Healthineers AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

American Eagle Outfitters

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Eagle Outfitters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Siemens Healthineers and American Eagle

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

The idea behind Siemens Healthineers AG and American Eagle Outfitters 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.