Correlation Between Siemens Healthineers and Insulet

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

Diversification Opportunities for Siemens Healthineers and Insulet

0.17

Correlation Coefficient

Siemens Healthineers  Insulet

Average diversification

The 3 months correlation between Siemens and Insulet is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and Insulet go up and down completely randomly.

Pair Corralation between Siemens Healthineers and Insulet

Assuming the 90 days trading horizon Siemens Healthineers is expected to generate 7.94 times less return on investment than Insulet. But when comparing it to its historical volatility, Siemens Healthineers AG is 1.76 times less risky than Insulet. It trades about 0.02 of its potential returns per unit of risk. Insulet is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  16,885  in Insulet on September 23, 2024 and sell it today you would earn a total of  7,615  from holding Insulet or generate 45.1% return on investment over 90 days.

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

Siemens Healthineers AG  vs.  Insulet

Siemens Healthineers

Risk-Adjusted Performance

6 of 100

Modest

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

Insulet

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Insulet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siemens Healthineers and Insulet

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

The idea behind Siemens Healthineers AG and Insulet 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.