Correlation Between Mercedes Benz and GreenPower
Can any of the company-specific risk be diversified away by investing in both Mercedes Benz and GreenPower 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 GreenPower 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 GreenPower Motor, you can compare the effects of market volatilities on Mercedes Benz and GreenPower 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 GreenPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes Benz and GreenPower.
Diversification Opportunities for Mercedes Benz and GreenPower
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercedes and GreenPower is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes Benz Group AG and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor 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 GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Mercedes Benz i.e., Mercedes Benz and GreenPower go up and down completely randomly.
Pair Corralation between Mercedes Benz and GreenPower
Assuming the 90 days horizon Mercedes Benz is expected to generate 8.01 times less return on investment than GreenPower. But when comparing it to its historical volatility, Mercedes Benz Group AG is 6.07 times less risky than GreenPower. It trades about 0.06 of its potential returns per unit of risk. GreenPower Motor is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 75.00 in GreenPower Motor on October 21, 2024 and sell it today you would earn a total of 6.00 from holding GreenPower Motor or generate 8.0% 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. GreenPower Motor
Performance |
| Timeline |
| Mercedes Benz Group |
| GreenPower Motor |
Mercedes Benz and GreenPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercedes Benz and GreenPower
The main advantage of trading using opposite Mercedes Benz and GreenPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes Benz position performs unexpectedly, GreenPower 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 GreenPower will offset losses from the drop in GreenPower's long position.| Mercedes Benz vs. Porsche Automobile Holding | Mercedes Benz vs. Volkswagen AG 110 | Mercedes Benz vs. Mercedes Benz Group AG | Mercedes Benz vs. Volkswagen AG Pref |
| GreenPower vs. Phoenix Motor Common | GreenPower vs. Envirotech Vehicles | GreenPower vs. Volcon Inc | GreenPower vs. Zapp Electric Vehicles |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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