Correlation Between Isuzu Motors and Mercedes-Benz Group
Can any of the company-specific risk be diversified away by investing in both Isuzu Motors 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 Isuzu Motors 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 Isuzu Motors and Mercedes Benz Group AG, you can compare the effects of market volatilities on Isuzu Motors 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 Isuzu Motors with a short position of Mercedes-Benz Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isuzu Motors and Mercedes-Benz Group.
Diversification Opportunities for Isuzu Motors and Mercedes-Benz Group
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Isuzu and Mercedes-Benz is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Isuzu Motors 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 Isuzu Motors 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 Isuzu Motors 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 Isuzu Motors i.e., Isuzu Motors and Mercedes-Benz Group go up and down completely randomly.
Pair Corralation between Isuzu Motors and Mercedes-Benz Group
Assuming the 90 days horizon Isuzu Motors is expected to under-perform the Mercedes-Benz Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Isuzu Motors is 1.33 times less risky than Mercedes-Benz Group. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Mercedes Benz Group AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. 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 | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Isuzu Motors vs. Mercedes Benz Group AG
Performance |
Timeline |
Isuzu Motors |
Mercedes Benz Group |
Isuzu Motors and Mercedes-Benz Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Isuzu Motors and Mercedes-Benz Group
The main advantage of trading using opposite Isuzu Motors and Mercedes-Benz Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isuzu Motors 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.Isuzu Motors vs. Suzuki Motor Corp | Isuzu Motors vs. Mitsubishi Estate Co | Isuzu Motors vs. Daiwa House Industry | Isuzu Motors vs. Mitsubishi Electric Corp |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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