Correlation Between Mercedes-Benz Group and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Mercedes-Benz Group and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on Mercedes-Benz Group and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes-Benz Group and Iridium Communications.
Diversification Opportunities for Mercedes-Benz Group and Iridium Communications
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mercedes-Benz and Iridium is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes Benz Group AG and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Mercedes-Benz Group i.e., Mercedes-Benz Group and Iridium Communications go up and down completely randomly.
Pair Corralation between Mercedes-Benz Group and Iridium Communications
Assuming the 90 days horizon Mercedes Benz Group AG is expected to generate 0.8 times more return on investment than Iridium Communications. However, Mercedes Benz Group AG is 1.25 times less risky than Iridium Communications. It trades about 0.13 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.2 per unit of risk. If you would invest 5,357 in Mercedes Benz Group AG on October 21, 2024 and sell it today you would earn a total of 159.00 from holding Mercedes Benz Group AG or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercedes Benz Group AG vs. Iridium Communications
Performance |
| Timeline |
| Mercedes Benz Group |
| Iridium Communications |
Mercedes-Benz Group and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercedes-Benz Group and Iridium Communications
The main advantage of trading using opposite Mercedes-Benz Group and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes-Benz Group position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Mercedes-Benz Group vs. TELECOM ITALIA | Mercedes-Benz Group vs. HUTCHISON TELECOMM | Mercedes-Benz Group vs. Zoom Video Communications | Mercedes-Benz Group vs. Ribbon Communications |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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