Correlation Between USWE SPORTS and Mercedes Benz
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS 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 USWE SPORTS and Mercedes Benz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and Mercedes Benz Group AG, you can compare the effects of market volatilities on USWE SPORTS 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 USWE SPORTS with a short position of Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Mercedes Benz.
Diversification Opportunities for USWE SPORTS and Mercedes Benz
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between USWE and Mercedes is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB 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 USWE SPORTS 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 USWE SPORTS AB 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 USWE SPORTS i.e., USWE SPORTS and Mercedes Benz go up and down completely randomly.
Pair Corralation between USWE SPORTS and Mercedes Benz
Assuming the 90 days horizon USWE SPORTS AB is expected to generate 2.38 times more return on investment than Mercedes Benz. However, USWE SPORTS is 2.38 times more volatile than Mercedes Benz Group AG. It trades about 0.2 of its potential returns per unit of risk. Mercedes Benz Group AG is currently generating about -0.09 per unit of risk. If you would invest 57.00 in USWE SPORTS AB on September 8, 2024 and sell it today you would earn a total of 18.00 from holding USWE SPORTS AB or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. Mercedes Benz Group AG
Performance |
| Timeline |
| USWE SPORTS AB |
| Mercedes Benz Group |
USWE SPORTS and Mercedes Benz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and Mercedes Benz
The main advantage of trading using opposite USWE SPORTS and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS 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.| USWE SPORTS vs. PARKEN Sport Entertainment | USWE SPORTS vs. Materialise NV | USWE SPORTS vs. Summit Materials | USWE SPORTS vs. ARDAGH METAL PACDL 0001 |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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