Correlation Between NikolaCorp and Mercedes Benz

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Can any of the company-specific risk be diversified away by investing in both NikolaCorp 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 NikolaCorp and Mercedes Benz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NikolaCorp and Mercedes Benz Group, you can compare the effects of market volatilities on NikolaCorp 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 NikolaCorp with a short position of Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of NikolaCorp and Mercedes Benz.

Diversification Opportunities for NikolaCorp and Mercedes Benz

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between NikolaCorp and Mercedes is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NikolaCorp 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 NikolaCorp 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 NikolaCorp 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 NikolaCorp i.e., NikolaCorp and Mercedes Benz go up and down completely randomly.

Pair Corralation between NikolaCorp and Mercedes Benz

If you would invest  206.00  in NikolaCorp on December 29, 2023 and sell it today you would lose (115.00) from holding NikolaCorp or give up 55.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

NikolaCorp  vs.  Mercedes Benz Group

 Performance 
       Timeline  
NikolaCorp 

Risk-Adjusted Performance

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Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in NikolaCorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady essential indicators, NikolaCorp sustained solid returns over the last few months and may actually be approaching a breakup point.
Mercedes Benz Group 

Risk-Adjusted Performance

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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.

NikolaCorp and Mercedes Benz Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NikolaCorp and Mercedes Benz

The main advantage of trading using opposite NikolaCorp and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NikolaCorp 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.
The idea behind NikolaCorp and Mercedes Benz Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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