Correlation Between Nuscale Power and Siemens Energy

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

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

Diversification Opportunities for Nuscale Power and Siemens Energy

0.91

Correlation Coefficient

Nuscale Power  Siemens Energy

Almost no diversification

The 3 months correlation between Nuscale and Siemens is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nuscale Power Corp 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 Nuscale Power 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 Nuscale Power Corp 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 Nuscale Power i.e., Nuscale Power and Siemens Energy go up and down completely randomly.

Pair Corralation between Nuscale Power and Siemens Energy

Considering the 90-day investment horizon Nuscale Power Corp is expected to generate 3.73 times more return on investment than Siemens Energy. However, Nuscale Power is 3.73 times more volatile than Siemens Energy AG. It trades about 0.2 of its potential returns per unit of risk. Siemens Energy AG is currently generating about 0.35 per unit of risk. If you would invest  968.00  in Nuscale Power Corp on September 13, 2024 and sell it today you would earn a total of  1,246  from holding Nuscale Power Corp or generate 128.72% return on investment over 90 days.

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

Nuscale Power Corp  vs.  Siemens Energy AG

Nuscale Power Corp

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuscale Power Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, Nuscale Power reported solid returns over the last few months and may actually be approaching a breakup point.

Siemens Energy AG

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Energy AG are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Siemens Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuscale Power and Siemens Energy

The main advantage of trading using opposite Nuscale Power and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuscale Power 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.

The idea behind Nuscale Power Corp and Siemens Energy AG 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 Transaction History module to view history of all your transactions and understand their impact on performance.