Correlation Between Mazda and Bayerische Motoren
Can any of the company-specific risk be diversified away by investing in both Mazda and Bayerische Motoren 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 Mazda and Bayerische Motoren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mazda Motor Corp and Bayerische Motoren Werke, you can compare the effects of market volatilities on Mazda and Bayerische Motoren 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 Mazda with a short position of Bayerische Motoren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mazda and Bayerische Motoren.
Diversification Opportunities for Mazda and Bayerische Motoren
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mazda and Bayerische is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mazda Motor Corp and Bayerische Motoren Werke in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayerische Motoren Werke and Mazda 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 Mazda Motor Corp are associated (or correlated) with Bayerische Motoren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayerische Motoren Werke has no effect on the direction of Mazda i.e., Mazda and Bayerische Motoren go up and down completely randomly.
Pair Corralation between Mazda and Bayerische Motoren
Assuming the 90 days horizon Mazda Motor Corp is expected to under-perform the Bayerische Motoren. In addition to that, Mazda is 1.01 times more volatile than Bayerische Motoren Werke. It trades about -0.19 of its total potential returns per unit of risk. Bayerische Motoren Werke is currently generating about -0.18 per unit of volatility. If you would invest 8,510 in Bayerische Motoren Werke on August 28, 2024 and sell it today you would lose (1,730) from holding Bayerische Motoren Werke or give up 20.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Mazda Motor Corp vs. Bayerische Motoren Werke
Performance |
| Timeline |
| Mazda Motor Corp |
| Bayerische Motoren Werke |
Mazda and Bayerische Motoren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mazda and Bayerische Motoren
The main advantage of trading using opposite Mazda and Bayerische Motoren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mazda position performs unexpectedly, Bayerische Motoren 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 Bayerische Motoren will offset losses from the drop in Bayerische Motoren's long position.| Mazda vs. Subaru Corp ADR | Mazda vs. Suzuki Motor Corp | Mazda vs. Isuzu Motors | Mazda vs. Bayerische Motoren Werke |
| Bayerische Motoren vs. Bayerische Motoren Werke | Bayerische Motoren vs. Honda Motor Co | Bayerische Motoren vs. Volkswagen AG VZO | Bayerische Motoren vs. Volkswagen AG |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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