Correlation Between Mastercard and Virtus Investment

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

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

Diversification Opportunities for Mastercard and Virtus Investment

0.93

Correlation Coefficient

Mastercard  Virtus Investment

Almost no diversification

The 3 months correlation between Mastercard and Virtus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Virtus Investment Partners, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Mastercard i.e., Mastercard and Virtus Investment go up and down completely randomly.

Pair Corralation between Mastercard and Virtus Investment

Allowing for the 90-day total investment horizon Mastercard is expected to generate 0.51 times more return on investment than Virtus Investment. However, Mastercard is 1.97 times less risky than Virtus Investment. It trades about 0.09 of its potential returns per unit of risk. Virtus Investment Partners, is currently generating about 0.04 per unit of risk. If you would invest  34,208  in Mastercard on September 17, 2024 and sell it today you would earn a total of  18,692  from holding Mastercard or generate 54.64% return on investment over 90 days.

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

Mastercard  vs.  Virtus Investment Partners,

Mastercard

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mastercard is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Virtus Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Virtus Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mastercard and Virtus Investment

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

The idea behind Mastercard and Virtus Investment Partners, 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.