Correlation Between Subaru Corp and Mercedes Benz
Can any of the company-specific risk be diversified away by investing in both Subaru Corp 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 Subaru Corp and Mercedes Benz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Subaru Corp ADR and Mercedes Benz Group AG, you can compare the effects of market volatilities on Subaru Corp 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 Subaru Corp with a short position of Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Subaru Corp and Mercedes Benz.
Diversification Opportunities for Subaru Corp and Mercedes Benz
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Subaru and Mercedes is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Subaru Corp ADR 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 Subaru Corp 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 Subaru Corp ADR 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 Subaru Corp i.e., Subaru Corp and Mercedes Benz go up and down completely randomly.
Pair Corralation between Subaru Corp and Mercedes Benz
Assuming the 90 days horizon Subaru Corp is expected to generate 4.34 times less return on investment than Mercedes Benz. In addition to that, Subaru Corp is 1.15 times more volatile than Mercedes Benz Group AG. It trades about 0.02 of its total potential returns per unit of risk. Mercedes Benz Group AG is currently generating about 0.08 per unit of volatility. If you would invest 5,568 in Mercedes Benz Group AG on December 29, 2024 and sell it today you would earn a total of 461.00 from holding Mercedes Benz Group AG or generate 8.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Subaru Corp ADR vs. Mercedes Benz Group AG
Performance |
Timeline |
Subaru Corp ADR |
Mercedes Benz Group |
Subaru Corp and Mercedes Benz Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Subaru Corp and Mercedes Benz
The main advantage of trading using opposite Subaru Corp and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Subaru Corp 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.Subaru Corp vs. Mazda Motor Corp | Subaru Corp vs. Subaru Corp | Subaru Corp vs. Bridgestone Corp ADR | Subaru Corp vs. Renault SA |
Mercedes Benz vs. Volkswagen AG Pref | Mercedes Benz vs. Porsche Automobile Holding | Mercedes Benz vs. Volkswagen AG | Mercedes Benz vs. Mercedes Benz Group AG |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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