Correlation Between StoneCo and Marqeta

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

By analyzing existing cross correlation between StoneCo and Marqeta, you can compare the effects of market volatilities on StoneCo and Marqeta 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 StoneCo with a short position of Marqeta. Check out your portfolio center. Please also check ongoing floating volatility patterns of StoneCo and Marqeta.

Diversification Opportunities for StoneCo and Marqeta

0.64

Correlation Coefficient

StoneCo  Marqeta

Poor diversification

The 3 months correlation between StoneCo and Marqeta is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding StoneCo and Marqeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marqeta and StoneCo 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 StoneCo are associated (or correlated) with Marqeta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marqeta has no effect on the direction of StoneCo i.e., StoneCo and Marqeta go up and down completely randomly.

Pair Corralation between StoneCo and Marqeta

Given the investment horizon of 90 days StoneCo is expected to under-perform the Marqeta. But the stock apears to be less risky and, when comparing its historical volatility, StoneCo is 2.2 times less risky than Marqeta. The stock trades about -0.14 of its potential returns per unit of risk. The Marqeta is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  508.00  in Marqeta on September 13, 2024 and sell it today you would lose (105.00) from holding Marqeta or give up 20.67% of portfolio value over 90 days.

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

StoneCo  vs.  Marqeta

StoneCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StoneCo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Marqeta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marqeta has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with StoneCo and Marqeta

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

The idea behind StoneCo and Marqeta 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.