Correlation Between Mercedes Benz and Nio

Can any of the company-specific risk be diversified away by investing in both Mercedes Benz and Nio 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 Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mercedes Benz Group and Nio Class A, you can compare the effects of market volatilities on Mercedes Benz and Nio 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 Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes Benz and Nio.

Diversification Opportunities for Mercedes Benz and Nio

0.0

Correlation Coefficient

Mercedes Benz  Nio

Pay attention - limited upside

The 3 months correlation between Mercedes and Nio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes Benz Group and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A 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 are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Mercedes Benz i.e., Mercedes Benz and Nio go up and down completely randomly.

Pair Corralation between Mercedes Benz and Nio

If you would invest  450.00  in Nio Class A on February 4, 2024 and sell it today you would earn a total of  107.00  from holding Nio Class A or generate 23.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Mercedes Benz Group  vs.  Nio Class A

Mercedes Benz Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercedes Benz Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Mercedes Benz is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Nio Class A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nio Class A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Nio may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Mercedes Benz and Nio

The main advantage of trading using opposite Mercedes Benz and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes Benz position performs unexpectedly, Nio 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 Nio will offset losses from the drop in Nio's long position.

The idea behind Mercedes Benz Group and Nio Class A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.