Correlation Between Mercedes Benz and Blue Bird

Can any of the company-specific risk be diversified away by investing in both Mercedes Benz and Blue Bird 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 Blue Bird 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 Blue Bird Corp, you can compare the effects of market volatilities on Mercedes Benz and Blue Bird 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 Blue Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes Benz and Blue Bird.

Diversification Opportunities for Mercedes Benz and Blue Bird

0.0

Correlation Coefficient

Mercedes Benz  Blue Bird

Pay attention - limited upside

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

Pair Corralation between Mercedes Benz and Blue Bird

If you would invest  1,806  in Blue Bird Corp on January 20, 2024 and sell it today you would earn a total of  1,556  from holding Blue Bird Corp or generate 86.16% 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.  Blue Bird Corp

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.

Blue Bird Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Bird Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental drivers, Blue Bird exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mercedes Benz and Blue Bird

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

The idea behind Mercedes Benz Group and Blue Bird Corp 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.