Correlation Between LANDSEA HOMES and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both LANDSEA HOMES and Siemens Energy 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 LANDSEA HOMES and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LANDSEA HOMES P and Siemens Energy AG, you can compare the effects of market volatilities on LANDSEA HOMES and Siemens Energy 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 LANDSEA HOMES with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANDSEA HOMES and Siemens Energy.
Diversification Opportunities for LANDSEA HOMES and Siemens Energy
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LANDSEA and Siemens is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding LANDSEA HOMES P and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy AG and LANDSEA HOMES 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 LANDSEA HOMES P are associated (or correlated) with Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of LANDSEA HOMES i.e., LANDSEA HOMES and Siemens Energy go up and down completely randomly.
Pair Corralation between LANDSEA HOMES and Siemens Energy
Assuming the 90 days horizon LANDSEA HOMES P is expected to under-perform the Siemens Energy. But the stock apears to be less risky and, when comparing its historical volatility, LANDSEA HOMES P is 1.02 times less risky than Siemens Energy. The stock trades about -0.14 of its potential returns per unit of risk. The Siemens Energy AG is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,308 in Siemens Energy AG on September 24, 2024 and sell it today you would earn a total of 1,804 from holding Siemens Energy AG or generate 54.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LANDSEA HOMES P vs. Siemens Energy AG
Performance |
Timeline |
LANDSEA HOMES P |
Siemens Energy AG |
LANDSEA HOMES and Siemens Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LANDSEA HOMES and Siemens Energy
The main advantage of trading using opposite LANDSEA HOMES and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LANDSEA HOMES position performs unexpectedly, Siemens Energy 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 Energy will offset losses from the drop in Siemens Energy's long position.LANDSEA HOMES vs. Deutsche Wohnen SE | LANDSEA HOMES vs. Gateway Real Estate | LANDSEA HOMES vs. TIMES CHINA HLDGS | LANDSEA HOMES vs. Greenland Hong Kong |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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