Correlation Between RETAIL FOOD and Mastercard

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

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

Diversification Opportunities for RETAIL FOOD and Mastercard

-0.1

Correlation Coefficient

RETAIL FOOD  Mastercard

Good diversification

The 3 months correlation between RETAIL and Mastercard is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard and RETAIL FOOD 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 RETAIL FOOD GROUP are associated (or correlated) with Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and Mastercard go up and down completely randomly.

Pair Corralation between RETAIL FOOD and Mastercard

Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the Mastercard. In addition to that, RETAIL FOOD is 2.42 times more volatile than Mastercard. It trades about -0.13 of its total potential returns per unit of risk. Mastercard is currently generating about -0.02 per unit of volatility. If you would invest  50,543  in Mastercard on December 23, 2024 and sell it today you would lose (1,223) from holding Mastercard or give up 2.42% of portfolio value over 90 days.

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

RETAIL FOOD GROUP  vs.  Mastercard

RETAIL FOOD GROUP

Risk-Adjusted Performance

Very Weak

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

Mastercard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mastercard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mastercard is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RETAIL FOOD and Mastercard

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

The idea behind RETAIL FOOD GROUP and Mastercard 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.