Correlation Between Mercedes-Benz Group and CSL
Can any of the company-specific risk be diversified away by investing in both Mercedes-Benz Group and CSL 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 CSL 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 CSL LTD SPONADR, you can compare the effects of market volatilities on Mercedes-Benz Group and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes-Benz Group and CSL.
Diversification Opportunities for Mercedes-Benz Group and CSL
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercedes-Benz and CSL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes Benz Group AG and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL LTD SPONADR has no effect on the direction of Mercedes-Benz Group i.e., Mercedes-Benz Group and CSL go up and down completely randomly.
Pair Corralation between Mercedes-Benz Group and CSL
Assuming the 90 days horizon Mercedes Benz Group AG is expected to under-perform the CSL. But the stock apears to be less risky and, when comparing its historical volatility, Mercedes Benz Group AG is 1.21 times less risky than CSL. The stock trades about -0.05 of its potential returns per unit of risk. The CSL LTD SPONADR is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 9,231 in CSL LTD SPONADR on August 31, 2024 and sell it today you would lose (581.00) from holding CSL LTD SPONADR or give up 6.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercedes Benz Group AG vs. CSL LTD SPONADR
Performance |
| Timeline |
| Mercedes Benz Group |
| CSL LTD SPONADR |
Mercedes-Benz Group and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercedes-Benz Group and CSL
The main advantage of trading using opposite Mercedes-Benz Group and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes-Benz Group position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| Mercedes-Benz Group vs. Public Storage | Mercedes-Benz Group vs. INFORMATION SVC GRP | Mercedes-Benz Group vs. DICKER DATA LTD | Mercedes-Benz Group vs. TERADATA |
| CSL vs. Superior Plus Corp | CSL vs. NMI Holdings | CSL vs. Origin Agritech | CSL 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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