Correlation Between Mastercard and CHINA WATER
Can any of the company-specific risk be diversified away by investing in both Mastercard and CHINA WATER 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 Mastercard and CHINA WATER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and CHINA WATER IGR, you can compare the effects of market volatilities on Mastercard and CHINA WATER 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 Mastercard with a short position of CHINA WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and CHINA WATER.
Diversification Opportunities for Mastercard and CHINA WATER
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mastercard and CHINA is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and CHINA WATER IGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA WATER IGR and Mastercard 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 Mastercard are associated (or correlated) with CHINA WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA WATER IGR has no effect on the direction of Mastercard i.e., Mastercard and CHINA WATER go up and down completely randomly.
Pair Corralation between Mastercard and CHINA WATER
Assuming the 90 days horizon Mastercard is expected to generate 0.08 times more return on investment than CHINA WATER. However, Mastercard is 12.68 times less risky than CHINA WATER. It trades about 0.07 of its potential returns per unit of risk. CHINA WATER IGR is currently generating about -0.07 per unit of risk. If you would invest 49,975 in Mastercard on September 25, 2024 and sell it today you would earn a total of 645.00 from holding Mastercard or generate 1.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Mastercard vs. CHINA WATER IGR
Performance |
Timeline |
Mastercard |
CHINA WATER IGR |
Mastercard and CHINA WATER Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mastercard and CHINA WATER
The main advantage of trading using opposite Mastercard and CHINA WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, CHINA WATER 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 CHINA WATER will offset losses from the drop in CHINA WATER's long position.Mastercard vs. Visa Inc | Mastercard vs. Visa Inc | Mastercard vs. Mastercard | Mastercard vs. American Express |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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