Correlation Between Siemens AG and Generac Holdings

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

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

Diversification Opportunities for Siemens AG and Generac Holdings

0.0

Correlation Coefficient

Siemens AG  Generac Holdings

Pay attention - limited upside

The 3 months correlation between Siemens and Generac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG ADR and Generac Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generac Holdings and Siemens AG 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 AG ADR are associated (or correlated) with Generac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generac Holdings has no effect on the direction of Siemens AG i.e., Siemens AG and Generac Holdings go up and down completely randomly.

Pair Corralation between Siemens AG and Generac Holdings

If you would invest (100.00) in Siemens AG ADR on November 20, 2024 and sell it today you would earn a total of  100.00  from holding Siemens AG ADR or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Siemens AG ADR  vs.  Generac Holdings

Siemens AG ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siemens AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Siemens AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Generac Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Generac Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Siemens AG and Generac Holdings

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

The idea behind Siemens AG ADR and Generac Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.