Correlation Between Mastercard Incorporated and Ecotel Communication

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

By analyzing existing cross correlation between Mastercard Incorporated and ecotel communication ag, you can compare the effects of market volatilities on Mastercard Incorporated and Ecotel Communication 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 Ecotel Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard Incorporated and Ecotel Communication.

Diversification Opportunities for Mastercard Incorporated and Ecotel Communication

0.57

Correlation Coefficient

Mastercard Incorporated  Ecotel Communication

Very weak diversification

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

Pair Corralation between Mastercard Incorporated and Ecotel Communication

Assuming the 90 days trading horizon Mastercard Incorporated is expected to generate 0.8 times more return on investment than Ecotel Communication. However, Mastercard Incorporated is 1.25 times less risky than Ecotel Communication. It trades about 0.14 of its potential returns per unit of risk. ecotel communication ag is currently generating about 0.07 per unit of risk. If you would invest  45,545  in Mastercard Incorporated on October 11, 2024 and sell it today you would earn a total of  4,465  from holding Mastercard Incorporated or generate 9.8% return on investment over 90 days.

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

Mastercard Incorporated  vs.  ecotel communication ag

Mastercard Incorporated

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard Incorporated are ranked lower than 11 (%) 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.

ecotel communication

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ecotel communication ag are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Ecotel Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mastercard Incorporated and Ecotel Communication

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

The idea behind Mastercard Incorporated and ecotel communication ag 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.