Correlation Between SIEMENS ENERGY and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both SIEMENS ENERGY and Universal Insurance 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 ENERGY and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIEMENS ENERGY AG and Universal Insurance Holdings, you can compare the effects of market volatilities on SIEMENS ENERGY and Universal Insurance 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 ENERGY with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS ENERGY and Universal Insurance.
Diversification Opportunities for SIEMENS ENERGY and Universal Insurance
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SIEMENS and Universal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS ENERGY AG and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and SIEMENS ENERGY 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 ENERGY AG are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of SIEMENS ENERGY i.e., SIEMENS ENERGY and Universal Insurance go up and down completely randomly.
Pair Corralation between SIEMENS ENERGY and Universal Insurance
Assuming the 90 days trading horizon SIEMENS ENERGY AG is expected to generate 0.89 times more return on investment than Universal Insurance. However, SIEMENS ENERGY AG is 1.13 times less risky than Universal Insurance. It trades about 0.27 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.02 per unit of risk. If you would invest 3,380 in SIEMENS ENERGY AG on September 25, 2024 and sell it today you would earn a total of 1,770 from holding SIEMENS ENERGY AG or generate 52.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.46% |
Values | Daily Returns |
SIEMENS ENERGY AG vs. Universal Insurance Holdings
Performance |
Timeline |
SIEMENS ENERGY AG |
Universal Insurance |
SIEMENS ENERGY and Universal Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SIEMENS ENERGY and Universal Insurance
The main advantage of trading using opposite SIEMENS ENERGY and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIEMENS ENERGY position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.SIEMENS ENERGY vs. Universal Insurance Holdings | SIEMENS ENERGY vs. DXC Technology Co | SIEMENS ENERGY vs. SMA Solar Technology | SIEMENS ENERGY vs. X FAB Silicon Foundries |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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