Correlation Between Moderna and Mercedes Benz

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

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

Diversification Opportunities for Moderna and Mercedes Benz

0.78

Correlation Coefficient

Moderna  Mercedes Benz

Poor diversification

The 3 months correlation between Moderna and Mercedes is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and Mercedes Benz Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz Group and Moderna 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 Moderna are associated (or correlated) with Mercedes Benz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercedes Benz Group has no effect on the direction of Moderna i.e., Moderna and Mercedes Benz go up and down completely randomly.

Pair Corralation between Moderna and Mercedes Benz

Assuming the 90 days horizon Moderna is expected to under-perform the Mercedes Benz. In addition to that, Moderna is 2.1 times more volatile than Mercedes Benz Group AG. It trades about -0.21 of its total potential returns per unit of risk. Mercedes Benz Group AG is currently generating about -0.04 per unit of volatility. If you would invest  5,620  in Mercedes Benz Group AG on September 22, 2024 and sell it today you would lose (279.00) from holding Mercedes Benz Group AG or give up 4.96% of portfolio value over 90 days.

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

Moderna  vs.  Mercedes Benz Group AG

Moderna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moderna 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.

Mercedes Benz Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Moderna and Mercedes Benz

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

The idea behind Moderna and Mercedes Benz Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.