Correlation Between Mercedes Benz and CSL
Can any of the company-specific risk be diversified away by investing in both Mercedes Benz 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 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 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 with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes Benz and CSL.
Diversification Opportunities for Mercedes Benz and CSL
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercedes and CSL is 0.6. 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 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 i.e., Mercedes Benz and CSL go up and down completely randomly.
Pair Corralation between Mercedes Benz and CSL
Assuming the 90 days horizon Mercedes Benz Group AG is expected to generate 1.01 times more return on investment than CSL. However, Mercedes Benz is 1.01 times more volatile than CSL LTD SPONADR. It trades about 0.08 of its potential returns per unit of risk. CSL LTD SPONADR is currently generating about -0.11 per unit of risk. If you would invest 5,245 in Mercedes Benz Group AG on September 23, 2024 and sell it today you would earn a total of 112.00 from holding Mercedes Benz Group AG or generate 2.14% return on investment 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 and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercedes Benz and CSL
The main advantage of trading using opposite Mercedes Benz and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes Benz 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 vs. Novo Nordisk AS | Mercedes Benz vs. CSL LTD SPONADR | Mercedes Benz vs. CSL Limited | Mercedes Benz vs. Vertex Pharmaceuticals Incorporated |
| CSL vs. LIFEWAY FOODS | CSL vs. National Beverage Corp | CSL vs. Thai Beverage Public | CSL vs. National Retail Properties |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |