Correlation Between Mastercard Incorporated and AFFLUENT MEDICAL

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

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

Diversification Opportunities for Mastercard Incorporated and AFFLUENT MEDICAL

-0.68

Correlation Coefficient

Mastercard Incorporated  AFFLUENT MEDICAL

Excellent diversification

The 3 months correlation between Mastercard and AFFLUENT is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard Incorporated and AFFLUENT MEDICAL SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFFLUENT MEDICAL SAS and Mastercard Incorporated 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 Incorporated are associated (or correlated) with AFFLUENT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFFLUENT MEDICAL SAS has no effect on the direction of Mastercard Incorporated i.e., Mastercard Incorporated and AFFLUENT MEDICAL go up and down completely randomly.

Pair Corralation between Mastercard Incorporated and AFFLUENT MEDICAL

Assuming the 90 days trading horizon Mastercard Incorporated is expected to generate 1.26 times less return on investment than AFFLUENT MEDICAL. But when comparing it to its historical volatility, Mastercard Incorporated is 5.25 times less risky than AFFLUENT MEDICAL. It trades about 0.07 of its potential returns per unit of risk. AFFLUENT MEDICAL SAS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  166.00  in AFFLUENT MEDICAL SAS on October 12, 2024 and sell it today you would lose (32.00) from holding AFFLUENT MEDICAL SAS or give up 19.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Mastercard Incorporated  vs.  AFFLUENT MEDICAL SAS

Mastercard Incorporated

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard Incorporated are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Mastercard Incorporated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AFFLUENT MEDICAL SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFFLUENT MEDICAL SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mastercard Incorporated and AFFLUENT MEDICAL

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

The idea behind Mastercard Incorporated and AFFLUENT MEDICAL SAS 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.