Correlation Between Mercedes-Benz Group and Talanx AG
Can any of the company-specific risk be diversified away by investing in both Mercedes-Benz Group and Talanx AG 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 Talanx AG 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 Talanx AG, you can compare the effects of market volatilities on Mercedes-Benz Group and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes-Benz Group and Talanx AG.
Diversification Opportunities for Mercedes-Benz Group and Talanx AG
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mercedes-Benz and Talanx is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes Benz Group AG and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of Mercedes-Benz Group i.e., Mercedes-Benz Group and Talanx AG go up and down completely randomly.
Pair Corralation between Mercedes-Benz Group and Talanx AG
Assuming the 90 days horizon Mercedes Benz Group AG is expected to under-perform the Talanx AG. In addition to that, Mercedes-Benz Group is 1.45 times more volatile than Talanx AG. It trades about -0.13 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.46 per unit of volatility. If you would invest 7,050 in Talanx AG on September 4, 2024 and sell it today you would earn a total of 915.00 from holding Talanx AG or generate 12.98% 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. Talanx AG
Performance |
| Timeline |
| Mercedes Benz Group |
| Talanx AG |
Mercedes-Benz Group and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercedes-Benz Group and Talanx AG
The main advantage of trading using opposite Mercedes-Benz Group and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes-Benz Group position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG's long position.| Mercedes-Benz Group vs. Moderna | Mercedes-Benz Group vs. BioNTech SE | Mercedes-Benz Group vs. Superior Plus Corp | Mercedes-Benz Group vs. NMI Holdings |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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