Correlation Between Siemens AG and IDEX

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

By analyzing existing cross correlation between Siemens AG Class and IDEX Corporation, you can compare the effects of market volatilities on Siemens AG and IDEX 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 IDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens AG and IDEX.

Diversification Opportunities for Siemens AG and IDEX

0.33

Correlation Coefficient

Siemens AG  IDEX

Weak diversification

The 3 months correlation between Siemens and IDEX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG Class and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX 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 Class are associated (or correlated) with IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of Siemens AG i.e., Siemens AG and IDEX go up and down completely randomly.

Pair Corralation between Siemens AG and IDEX

Assuming the 90 days horizon Siemens AG is expected to generate 1.43 times less return on investment than IDEX. In addition to that, Siemens AG is 1.51 times more volatile than IDEX Corporation. It trades about 0.03 of its total potential returns per unit of risk. IDEX Corporation is currently generating about 0.06 per unit of volatility. If you would invest  22,471  in IDEX Corporation on September 6, 2024 and sell it today you would earn a total of  374.00  from holding IDEX Corporation or generate 1.66% return on investment over 90 days.

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

Siemens AG Class  vs.  IDEX Corp.

Siemens AG Class

Risk-Adjusted Performance

6 of 100

Modest

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

IDEX

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDEX Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, IDEX showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siemens AG and IDEX

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

The idea behind Siemens AG Class and IDEX Corporation 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.