Correlation Between Mercedes-Benz Group and Mercedes Benz
Can any of the company-specific risk be diversified away by investing in both Mercedes-Benz Group 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 Mercedes-Benz Group and Mercedes Benz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercedes Benz Group AG and Mercedes Benz Group AG, you can compare the effects of market volatilities on Mercedes-Benz Group 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 Mercedes-Benz Group with a short position of Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes-Benz Group and Mercedes Benz.
Diversification Opportunities for Mercedes-Benz Group and Mercedes Benz
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Mercedes-Benz and Mercedes is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes Benz Group AG 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 Mercedes-Benz Group 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 Mercedes Benz Group AG 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 Mercedes-Benz Group i.e., Mercedes-Benz Group and Mercedes Benz go up and down completely randomly.
Pair Corralation between Mercedes-Benz Group and Mercedes Benz
Assuming the 90 days horizon Mercedes Benz Group AG is expected to generate 0.96 times more return on investment than Mercedes Benz. However, Mercedes Benz Group AG is 1.04 times less risky than Mercedes Benz. It trades about 0.13 of its potential returns per unit of risk. Mercedes Benz Group AG is currently generating about 0.12 per unit of risk. If you would invest 1,372 in Mercedes Benz Group AG on December 1, 2024 and sell it today you would earn a total of 172.00 from holding Mercedes Benz Group AG or generate 12.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mercedes Benz Group AG vs. Mercedes Benz Group AG
Performance |
Timeline |
Mercedes Benz Group |
Mercedes Benz Group |
Mercedes-Benz Group and Mercedes Benz Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mercedes-Benz Group and Mercedes Benz
The main advantage of trading using opposite Mercedes-Benz Group and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes-Benz Group 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.Mercedes-Benz Group vs. Porsche Automobile Holding | Mercedes-Benz Group vs. Volkswagen AG 110 | Mercedes-Benz Group vs. Mercedes Benz Group AG | Mercedes-Benz Group vs. Volkswagen AG Pref |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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