Correlation Between Canoo and Mercedes-Benz Group

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

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

Diversification Opportunities for Canoo and Mercedes-Benz Group

-0.83

Correlation Coefficient

Canoo  Mercedes-Benz Group

Pay attention - limited upside

The 3 months correlation between Canoo and Mercedes-Benz is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Inc 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 Canoo 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 Canoo Inc are associated (or correlated) with Mercedes-Benz Group. 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 Canoo i.e., Canoo and Mercedes-Benz Group go up and down completely randomly.

Pair Corralation between Canoo and Mercedes-Benz Group

Given the investment horizon of 90 days Canoo Inc is expected to under-perform the Mercedes-Benz Group. In addition to that, Canoo is 13.67 times more volatile than Mercedes Benz Group AG. It trades about -0.19 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  1,389  in Mercedes Benz Group AG on December 29, 2024 and sell it today you would earn a total of  111.00  from holding Mercedes Benz Group AG or generate 7.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	37.7%
Values	Daily Returns

Canoo Inc  vs.  Mercedes Benz Group AG

Canoo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canoo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Mercedes Benz Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mercedes Benz Group AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Mercedes-Benz Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Canoo and Mercedes-Benz Group

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

The idea behind Canoo Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.