Correlation Between Mercedes-Benz Group and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both Mercedes-Benz Group and NorAm Drilling 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 NorAm Drilling 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 NorAm Drilling AS, you can compare the effects of market volatilities on Mercedes-Benz Group and NorAm Drilling 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 NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes-Benz Group and NorAm Drilling.
Diversification Opportunities for Mercedes-Benz Group and NorAm Drilling
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mercedes-Benz and NorAm is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes Benz Group AG and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS 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 NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of Mercedes-Benz Group i.e., Mercedes-Benz Group and NorAm Drilling go up and down completely randomly.
Pair Corralation between Mercedes-Benz Group and NorAm Drilling
Assuming the 90 days horizon Mercedes Benz Group AG is expected to under-perform the NorAm Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Mercedes Benz Group AG is 2.7 times less risky than NorAm Drilling. The stock trades about -0.13 of its potential returns per unit of risk. The NorAm Drilling AS is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 304.00 in NorAm Drilling AS on September 4, 2024 and sell it today you would lose (14.00) from holding NorAm Drilling AS or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercedes Benz Group AG vs. NorAm Drilling AS
Performance |
| Timeline |
| Mercedes Benz Group |
| NorAm Drilling AS |
Mercedes-Benz Group and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercedes-Benz Group and NorAm Drilling
The main advantage of trading using opposite Mercedes-Benz Group and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes-Benz Group position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling'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 |
| NorAm Drilling vs. AUTO TRADER ADR | NorAm Drilling vs. IDP EDUCATION LTD | NorAm Drilling vs. Perdoceo Education | NorAm Drilling vs. Strategic Education |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |