Correlation Between Mastercard Incorporated and Gruma SAB

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

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

Diversification Opportunities for Mastercard Incorporated and Gruma SAB

-0.54

Correlation Coefficient

Mastercard Incorporated  Gruma SAB

Excellent diversification

The 3 months correlation between Mastercard and Gruma is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard Incorporated and Gruma SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruma SAB de 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 Gruma SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruma SAB de has no effect on the direction of Mastercard Incorporated i.e., Mastercard Incorporated and Gruma SAB go up and down completely randomly.

Pair Corralation between Mastercard Incorporated and Gruma SAB

Assuming the 90 days horizon Mastercard Incorporated is expected to under-perform the Gruma SAB. But the stock apears to be less risky and, when comparing its historical volatility, Mastercard Incorporated is 1.65 times less risky than Gruma SAB. The stock trades about -0.19 of its potential returns per unit of risk. The Gruma SAB de is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  34,017  in Gruma SAB de on September 27, 2024 and sell it today you would lose (751.00) from holding Gruma SAB de or give up 2.21% of portfolio value over 90 days.

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

Mastercard Incorporated  vs.  Gruma SAB de

Mastercard Incorporated

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard Incorporated are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Mastercard Incorporated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gruma SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gruma SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Mastercard Incorporated and Gruma SAB

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

The idea behind Mastercard Incorporated and Gruma SAB de 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.