Correlation Between Siemens Healthineers and Prudential Financial

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

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

Diversification Opportunities for Siemens Healthineers and Prudential Financial

0.59

Correlation Coefficient

Siemens Healthineers  Prudential Financial

Very weak diversification

The 3 months correlation between Siemens and Prudential is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Siemens Healthineers 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 Healthineers AG are associated (or correlated) with Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and Prudential Financial go up and down completely randomly.

Pair Corralation between Siemens Healthineers and Prudential Financial

Assuming the 90 days horizon Siemens Healthineers AG is expected to generate 0.86 times more return on investment than Prudential Financial. However, Siemens Healthineers AG is 1.16 times less risky than Prudential Financial. It trades about 0.01 of its potential returns per unit of risk. Prudential Financial is currently generating about -0.02 per unit of risk. If you would invest  4,563  in Siemens Healthineers AG on April 24, 2025 and sell it today you would earn a total of  31.00  from holding Siemens Healthineers AG or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Siemens Healthineers AG  vs.  Prudential Financial

Siemens Healthineers

Risk-Adjusted Performance

Weak

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

Prudential Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Prudential Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Siemens Healthineers and Prudential Financial

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

The idea behind Siemens Healthineers AG and Prudential Financial 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.