Correlation Between Tesla and MERCEDES-BENZ GRP
Can any of the company-specific risk be diversified away by investing in both Tesla and MERCEDES-BENZ GRP 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 Tesla and MERCEDES-BENZ GRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and MERCEDES BENZ GRP ADR14, you can compare the effects of market volatilities on Tesla and MERCEDES-BENZ GRP 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 Tesla with a short position of MERCEDES-BENZ GRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and MERCEDES-BENZ GRP.
Diversification Opportunities for Tesla and MERCEDES-BENZ GRP
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tesla and MERCEDES-BENZ is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and MERCEDES BENZ GRP ADR14 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCEDES BENZ GRP and Tesla 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 Tesla Inc are associated (or correlated) with MERCEDES-BENZ GRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCEDES BENZ GRP has no effect on the direction of Tesla i.e., Tesla and MERCEDES-BENZ GRP go up and down completely randomly.
Pair Corralation between Tesla and MERCEDES-BENZ GRP
Assuming the 90 days horizon Tesla Inc is expected to under-perform the MERCEDES-BENZ GRP. In addition to that, Tesla is 1.59 times more volatile than MERCEDES BENZ GRP ADR14. It trades about -0.04 of its total potential returns per unit of risk. MERCEDES BENZ GRP ADR14 is currently generating about 0.09 per unit of volatility. If you would invest 1,300 in MERCEDES BENZ GRP ADR14 on October 20, 2024 and sell it today you would earn a total of 50.00 from holding MERCEDES BENZ GRP ADR14 or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. MERCEDES BENZ GRP ADR14
Performance |
| Timeline |
| Tesla Inc |
| MERCEDES BENZ GRP |
Tesla and MERCEDES-BENZ GRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and MERCEDES-BENZ GRP
The main advantage of trading using opposite Tesla and MERCEDES-BENZ GRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, MERCEDES-BENZ GRP 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 MERCEDES-BENZ GRP will offset losses from the drop in MERCEDES-BENZ GRP's long position.| Tesla vs. Fevertree Drinks PLC | Tesla vs. Magnachip Semiconductor | Tesla vs. National Beverage Corp | Tesla vs. Forsys Metals Corp |
| MERCEDES-BENZ GRP vs. Tesla Inc | MERCEDES-BENZ GRP vs. Toyota Motor | MERCEDES-BENZ GRP vs. Toyota Motor | MERCEDES-BENZ GRP vs. BYD Company Limited |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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