Correlation Between SIEMENS HEALTH and IQVIA Holdings

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

By analyzing existing cross correlation between SIEMENS HEALTH ADR050 and IQVIA Holdings, you can compare the effects of market volatilities on SIEMENS HEALTH and IQVIA 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 HEALTH with a short position of IQVIA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS HEALTH and IQVIA Holdings.

Diversification Opportunities for SIEMENS HEALTH and IQVIA Holdings

0.27

Correlation Coefficient

SIEMENS HEALTH  IQVIA Holdings

Modest diversification

The 3 months correlation between SIEMENS and IQVIA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS HEALTH ADR050 and IQVIA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQVIA Holdings and SIEMENS HEALTH 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 HEALTH ADR050 are associated (or correlated) with IQVIA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQVIA Holdings has no effect on the direction of SIEMENS HEALTH i.e., SIEMENS HEALTH and IQVIA Holdings go up and down completely randomly.

Pair Corralation between SIEMENS HEALTH and IQVIA Holdings

Assuming the 90 days trading horizon SIEMENS HEALTH ADR050 is expected to generate 1.12 times more return on investment than IQVIA Holdings. However, SIEMENS HEALTH is 1.12 times more volatile than IQVIA Holdings. It trades about 0.02 of its potential returns per unit of risk. IQVIA Holdings is currently generating about -0.13 per unit of risk. If you would invest  2,540  in SIEMENS HEALTH ADR050 on September 4, 2024 and sell it today you would earn a total of  40.00  from holding SIEMENS HEALTH ADR050 or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

SIEMENS HEALTH ADR050  vs.  IQVIA Holdings

SIEMENS HEALTH ADR050

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIEMENS HEALTH ADR050 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, SIEMENS HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

IQVIA Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQVIA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SIEMENS HEALTH and IQVIA Holdings

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

The idea behind SIEMENS HEALTH ADR050 and IQVIA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.