Correlation Between Mastercard Incorporated and Gruma SAB
Can any of the company-specific risk be diversified away by investing in both Mastercard Incorporated and Gruma SAB 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 Incorporated and Gruma SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard Incorporated and Gruma SAB de, you can compare the effects of market volatilities on Mastercard Incorporated and Gruma SAB 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 Incorporated with a short position of Gruma SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard Incorporated and Gruma SAB.
Diversification Opportunities for Mastercard Incorporated and Gruma SAB
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mastercard and Gruma is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard Incorporated and Gruma SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruma SAB de and Mastercard Incorporated 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 Incorporated are associated (or correlated) with Gruma SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruma SAB de has no effect on the direction of Mastercard Incorporated i.e., Mastercard Incorporated and Gruma SAB go up and down completely randomly.
Pair Corralation between Mastercard Incorporated and Gruma SAB
Assuming the 90 days horizon Mastercard Incorporated is expected to generate 0.86 times more return on investment than Gruma SAB. However, Mastercard Incorporated is 1.17 times less risky than Gruma SAB. It trades about 0.15 of its potential returns per unit of risk. Gruma SAB de is currently generating about 0.01 per unit of risk. If you would invest 813,706 in Mastercard Incorporated on September 25, 2024 and sell it today you would earn a total of 244,420 from holding Mastercard Incorporated or generate 30.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Mastercard Incorporated vs. Gruma SAB de
Performance |
Timeline |
Mastercard Incorporated |
Gruma SAB de |
Mastercard Incorporated and Gruma SAB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mastercard Incorporated and Gruma SAB
The main advantage of trading using opposite Mastercard Incorporated and Gruma SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard Incorporated position performs unexpectedly, Gruma SAB 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 Gruma SAB will offset losses from the drop in Gruma SAB's long position.Mastercard Incorporated vs. Visa Inc | Mastercard Incorporated vs. American Express | Mastercard Incorporated vs. Capital One Financial | Mastercard Incorporated vs. The Western Union |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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