Correlation Between Mastercard and JP RL

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

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

Diversification Opportunities for Mastercard and JP RL

-0.57

Correlation Coefficient

Mastercard  JP RL

Excellent diversification

The 3 months correlation between Mastercard and JUA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and JP RL EST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP RL EST 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 JP RL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP RL EST has no effect on the direction of Mastercard i.e., Mastercard and JP RL go up and down completely randomly.

Pair Corralation between Mastercard and JP RL

Assuming the 90 days horizon Mastercard is expected to generate 0.99 times more return on investment than JP RL. However, Mastercard is 1.01 times less risky than JP RL. It trades about 0.07 of its potential returns per unit of risk. JP RL EST is currently generating about -0.03 per unit of risk. If you would invest  34,648  in Mastercard on October 3, 2024 and sell it today you would earn a total of  16,302  from holding Mastercard or generate 47.05% return on investment over 90 days.

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

Mastercard  vs.  JP RL EST

Mastercard

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mastercard reported solid returns over the last few months and may actually be approaching a breakup point.

JP RL EST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JP RL EST 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mastercard and JP RL

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

The idea behind Mastercard and JP RL EST 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.