Correlation Between Mastercard and ORIX

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

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

Diversification Opportunities for Mastercard and ORIX

0.01

Correlation Coefficient

Mastercard  ORIX

Significant diversification

The 3 months correlation between Mastercard and ORIX is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and ORIX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX 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 ORIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX has no effect on the direction of Mastercard i.e., Mastercard and ORIX go up and down completely randomly.

Pair Corralation between Mastercard and ORIX

Assuming the 90 days trading horizon Mastercard is expected to generate 0.55 times more return on investment than ORIX. However, Mastercard is 1.81 times less risky than ORIX. It trades about 0.19 of its potential returns per unit of risk. ORIX Corporation is currently generating about 0.0 per unit of risk. If you would invest  44,435  in Mastercard on September 16, 2024 and sell it today you would earn a total of  6,365  from holding Mastercard or generate 14.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mastercard  vs.  ORIX Corp.

Mastercard

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, Mastercard unveiled solid returns over the last few months and may actually be approaching a breakup point.

ORIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ORIX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ORIX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mastercard and ORIX

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

The idea behind Mastercard and ORIX Corporation 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.