Correlation Between Honda and Mercedes Benz
Can any of the company-specific risk be diversified away by investing in both Honda and Mercedes Benz 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 Honda and Mercedes Benz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honda Motor Co and Mercedes Benz Group, you can compare the effects of market volatilities on Honda and Mercedes Benz 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 Honda with a short position of Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honda and Mercedes Benz.
Diversification Opportunities for Honda and Mercedes Benz
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Honda and Mercedes is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Honda Motor Co and Mercedes Benz Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz Group and Honda 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 Honda Motor Co are associated (or correlated) with Mercedes Benz. 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 Group has no effect on the direction of Honda i.e., Honda and Mercedes Benz go up and down completely randomly.
Pair Corralation between Honda and Mercedes Benz
If you would invest (100.00) in Mercedes Benz Group on January 26, 2024 and sell it today you would earn a total of 100.00 from holding Mercedes Benz Group or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Honda Motor Co vs. Mercedes Benz Group
Performance |
| Timeline |
| Honda Motor |
| Mercedes Benz Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Honda and Mercedes Benz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honda and Mercedes Benz
The main advantage of trading using opposite Honda and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honda position performs unexpectedly, Mercedes Benz 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 will offset losses from the drop in Mercedes Benz's long position.| Honda vs. Hycroft Mining Holding | Honda vs. Imperial Petroleum | Honda vs. Exela Technologies | Honda vs. Camber Energy |
| Mercedes Benz vs. Microbot Medical | Mercedes Benz vs. Merit Medical Systems | Mercedes Benz vs. Alvotech | Mercedes Benz vs. Teleflex Incorporated |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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