Correlation Between Mercedes-Benz Group and Adobe Systems

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Mercedes-Benz Group and Adobe Systems 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 Group and Adobe Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercedes-Benz Group AG and Adobe Systems Incorporated, you can compare the effects of market volatilities on Mercedes-Benz Group and Adobe Systems 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 Group with a short position of Adobe Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes-Benz Group and Adobe Systems.

Diversification Opportunities for Mercedes-Benz Group and Adobe Systems

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Mercedes-Benz and Adobe is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes-Benz Group AG and Adobe Systems Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Systems Incorp and Mercedes-Benz Group 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 AG are associated (or correlated) with Adobe Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Systems Incorp has no effect on the direction of Mercedes-Benz Group i.e., Mercedes-Benz Group and Adobe Systems go up and down completely randomly.

Pair Corralation between Mercedes-Benz Group and Adobe Systems

Assuming the 90 days horizon Mercedes-Benz Group AG is expected to generate 1.0 times more return on investment than Adobe Systems. However, Mercedes-Benz Group AG is 1.0 times less risky than Adobe Systems. It trades about 0.01 of its potential returns per unit of risk. Adobe Systems Incorporated is currently generating about -0.02 per unit of risk. If you would invest  1,623  in Mercedes-Benz Group AG on September 8, 2022 and sell it today you would earn a total of  55.00  from holding Mercedes-Benz Group AG or generate 3.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Mercedes-Benz Group AG  vs.  Adobe Systems Incorporated

 Performance (%) 
       Timeline  
Mercedes-Benz Group 
Mercedes-Benz Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Mercedes-Benz Group AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Mercedes-Benz Group showed solid returns over the last few months and may actually be approaching a breakup point.

Mercedes-Benz Price Channel

Adobe Systems Incorp 
Adobe Performance
0 of 100
Over the last 90 days Adobe Systems Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Adobe Price Channel

Mercedes-Benz Group and Adobe Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mercedes-Benz Group and Adobe Systems

The main advantage of trading using opposite Mercedes-Benz Group and Adobe Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes-Benz Group position performs unexpectedly, Adobe Systems 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 Adobe Systems will offset losses from the drop in Adobe Systems' long position.
Mercedes-Benz Group vs. Givaudan SA
Mercedes-Benz Group vs. Sika AG
Mercedes-Benz Group vs. Novozymes AS
Mercedes-Benz Group vs. Akzo Nobel NV
The idea behind Mercedes-Benz Group AG and Adobe Systems Incorporated 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.
Adobe Systems vs. Bank Of America
Adobe Systems vs. The Travelers Companies
Adobe Systems vs. Intel
Adobe Systems vs. Alcoa Corp
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

Other Complementary Tools

Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go