Correlation Between Mastercard and RATIONAL Aktiengesellscha

Can any of the company-specific risk be diversified away by investing in both Mastercard and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mastercard and RATIONAL Aktiengesellschaft, you can compare the effects of market volatilities on Mastercard and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and RATIONAL Aktiengesellscha.

Diversification Opportunities for Mastercard and RATIONAL Aktiengesellscha

-0.57

Correlation Coefficient

Mastercard  RATIONAL Aktiengesellscha

Excellent diversification

The 3 months correlation between Mastercard and RATIONAL is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and RATIONAL Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATIONAL Aktiengesellscha has no effect on the direction of Mastercard i.e., Mastercard and RATIONAL Aktiengesellscha go up and down completely randomly.

Pair Corralation between Mastercard and RATIONAL Aktiengesellscha

Assuming the 90 days horizon Mastercard is expected to generate 0.92 times more return on investment than RATIONAL Aktiengesellscha. However, Mastercard is 1.08 times less risky than RATIONAL Aktiengesellscha. It trades about 0.19 of its potential returns per unit of risk. RATIONAL Aktiengesellschaft is currently generating about -0.1 per unit of risk. If you would invest  43,911  in Mastercard on September 26, 2024 and sell it today you would earn a total of  6,709  from holding Mastercard or generate 15.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mastercard  vs.  RATIONAL Aktiengesellschaft

Mastercard

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Mastercard reported solid returns over the last few months and may actually be approaching a breakup point.

RATIONAL Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RATIONAL Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mastercard and RATIONAL Aktiengesellscha

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

The idea behind Mastercard and RATIONAL Aktiengesellschaft 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.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.