Correlation Between Titan Company and Mastercard Incorporated

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

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

Diversification Opportunities for Titan Company and Mastercard Incorporated

-0.87

Correlation Coefficient

Titan Company  Mastercard Incorporated

Pay attention - limited upside

The 3 months correlation between Titan and Mastercard is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated and Titan Company 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 Titan Company Limited are associated (or correlated) with Mastercard Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard Incorporated has no effect on the direction of Titan Company i.e., Titan Company and Mastercard Incorporated go up and down completely randomly.

Pair Corralation between Titan Company and Mastercard Incorporated

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Mastercard Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.08 times less risky than Mastercard Incorporated. The stock trades about -0.13 of its potential returns per unit of risk. The Mastercard Incorporated is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  943,635  in Mastercard Incorporated on September 5, 2024 and sell it today you would earn a total of  130,965  from holding Mastercard Incorporated or generate 13.88% return on investment over 90 days.

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

Titan Company Limited  vs.  Mastercard Incorporated

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Mastercard Incorporated

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard Incorporated are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Mastercard Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and Mastercard Incorporated

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

The idea behind Titan Company Limited and Mastercard Incorporated 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.