Correlation Between DevEx Resources and Mastercard Incorporated

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

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

Diversification Opportunities for DevEx Resources and Mastercard Incorporated

-0.13

Correlation Coefficient

DevEx Resources  Mastercard Incorporated

Good diversification

The 3 months correlation between DevEx and Mastercard is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding DevEx Resources Limited and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated and DevEx Resources 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 DevEx Resources 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 DevEx Resources i.e., DevEx Resources and Mastercard Incorporated go up and down completely randomly.

Pair Corralation between DevEx Resources and Mastercard Incorporated

Assuming the 90 days horizon DevEx Resources Limited is expected to generate 7.09 times more return on investment than Mastercard Incorporated. However, DevEx Resources is 7.09 times more volatile than Mastercard Incorporated. It trades about 0.05 of its potential returns per unit of risk. Mastercard Incorporated is currently generating about -0.01 per unit of risk. If you would invest  4.75  in DevEx Resources Limited on December 22, 2024 and sell it today you would lose (0.10) from holding DevEx Resources Limited or give up 2.11% of portfolio value over 90 days.

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

DevEx Resources Limited  vs.  Mastercard Incorporated

DevEx Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DevEx Resources Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, DevEx Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Mastercard Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mastercard Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Mastercard Incorporated is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DevEx Resources and Mastercard Incorporated

The main advantage of trading using opposite DevEx Resources and Mastercard Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DevEx Resources 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 DevEx Resources 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.