Correlation Between MERCEDES-BENZ GRP and Yamaha
Can any of the company-specific risk be diversified away by investing in both MERCEDES-BENZ GRP and Yamaha 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 GRP and Yamaha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MERCEDES BENZ GRP ADR14 and Yamaha Motor Co, you can compare the effects of market volatilities on MERCEDES-BENZ GRP and Yamaha 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 GRP with a short position of Yamaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of MERCEDES-BENZ GRP and Yamaha.
Diversification Opportunities for MERCEDES-BENZ GRP and Yamaha
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MERCEDES-BENZ and Yamaha is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MERCEDES BENZ GRP ADR14 and Yamaha Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha Motor and MERCEDES-BENZ GRP 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 GRP ADR14 are associated (or correlated) with Yamaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha Motor has no effect on the direction of MERCEDES-BENZ GRP i.e., MERCEDES-BENZ GRP and Yamaha go up and down completely randomly.
Pair Corralation between MERCEDES-BENZ GRP and Yamaha
Assuming the 90 days trading horizon MERCEDES BENZ GRP ADR14 is expected to under-perform the Yamaha. In addition to that, MERCEDES-BENZ GRP is 1.21 times more volatile than Yamaha Motor Co. It trades about -0.17 of its total potential returns per unit of risk. Yamaha Motor Co is currently generating about 0.09 per unit of volatility. If you would invest 791.00 in Yamaha Motor Co on August 28, 2024 and sell it today you would earn a total of 23.00 from holding Yamaha Motor Co or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MERCEDES BENZ GRP ADR14 vs. Yamaha Motor Co
Performance |
| Timeline |
| MERCEDES BENZ GRP |
| Yamaha Motor |
MERCEDES-BENZ GRP and Yamaha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MERCEDES-BENZ GRP and Yamaha
The main advantage of trading using opposite MERCEDES-BENZ GRP and Yamaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MERCEDES-BENZ GRP position performs unexpectedly, Yamaha 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 Yamaha will offset losses from the drop in Yamaha's long position.| MERCEDES-BENZ GRP vs. Superior Plus Corp | MERCEDES-BENZ GRP vs. NMI Holdings | MERCEDES-BENZ GRP vs. Origin Agritech | MERCEDES-BENZ GRP vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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