Correlation Between Mercedes Benz and Identiv
Can any of the company-specific risk be diversified away by investing in both Mercedes Benz and Identiv 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 Identiv 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 Identiv, you can compare the effects of market volatilities on Mercedes Benz and Identiv 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 Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes Benz and Identiv.
Diversification Opportunities for Mercedes Benz and Identiv
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mercedes and Identiv is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes Benz Group AG and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Mercedes Benz i.e., Mercedes Benz and Identiv go up and down completely randomly.
Pair Corralation between Mercedes Benz and Identiv
Assuming the 90 days horizon Mercedes Benz Group AG is expected to generate 0.32 times more return on investment than Identiv. However, Mercedes Benz Group AG is 3.11 times less risky than Identiv. It trades about -0.03 of its potential returns per unit of risk. Identiv is currently generating about -0.03 per unit of risk. If you would invest 6,222 in Mercedes Benz Group AG on August 30, 2024 and sell it today you would lose (981.00) from holding Mercedes Benz Group AG or give up 15.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercedes Benz Group AG vs. Identiv
Performance |
| Timeline |
| Mercedes Benz Group |
| Identiv |
Mercedes Benz and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercedes Benz and Identiv
The main advantage of trading using opposite Mercedes Benz and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes Benz position performs unexpectedly, Identiv 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 Identiv will offset losses from the drop in Identiv's long position.| Mercedes Benz vs. Global Ship Lease | Mercedes Benz vs. ALBIS LEASING AG | Mercedes Benz vs. Consolidated Communications Holdings | Mercedes Benz vs. GOODYEAR T RUBBER |
| Identiv vs. NIPPON STEEL SPADR | Identiv vs. GFL ENVIRONM | Identiv vs. RELIANCE STEEL AL | Identiv vs. United States Steel |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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