An Empirical Analysis of Risk, Return, and Liquidity in Mercedes-Benz Stock: Evidence from 1996-2021
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This study examines the risk, return, and liquidity dynamics of Mercedes-Benz stock using daily market data from 1996 through 2021. The analysis uses open, high, low, close, adjusted close, and trading-volume variables, using adjusted closing prices to measure investment performance and daily returns. The study evaluates long-run performance, annual return variation, volatility, maximum drawdown, and the relationship between trading activity and price movement. The empirical results show that Mercedes-Benz stock generated a total adjusted return of 400.19% and an estimated compound annual growth rate of 6.49%, indicating meaningful long-term value creation. However, this return came with substantial risk, including annualized volatility of 34.71% and a maximum drawdown of -76.50%. Correlation and regression evidence further indicates that trading volume is more closely associated with absolute return and intraday range than with signed daily return. These findings suggest that volume is more informative about the intensity of price movement than about return direction. Overall, the paper supports a risk-return-liquidity interpretation of Mercedes-Benz stock behavior and provides empirical evidence that daily market data can be used to evaluate volatility, downside risk, and liquidity-related dynamics in a major international equity.
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