Correlation Between Mastercard Incorporated and Grupo Herdez

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

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

Diversification Opportunities for Mastercard Incorporated and Grupo Herdez

-0.02

Correlation Coefficient

Mastercard Incorporated  Grupo Herdez

Good diversification

The 3 months correlation between Mastercard and Grupo is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard Incorporated and Grupo Herdez SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Herdez SAB 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 Grupo Herdez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Herdez SAB has no effect on the direction of Mastercard Incorporated i.e., Mastercard Incorporated and Grupo Herdez go up and down completely randomly.

Pair Corralation between Mastercard Incorporated and Grupo Herdez

Assuming the 90 days horizon Mastercard Incorporated is expected to under-perform the Grupo Herdez. But the stock apears to be less risky and, when comparing its historical volatility, Mastercard Incorporated is 2.0 times less risky than Grupo Herdez. The stock trades about -0.03 of its potential returns per unit of risk. The Grupo Herdez SAB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,065  in Grupo Herdez SAB on September 23, 2024 and sell it today you would earn a total of  159.00  from holding Grupo Herdez SAB or generate 3.14% return on investment over 90 days.

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

Mastercard Incorporated  vs.  Grupo Herdez SAB

Mastercard Incorporated

Risk-Adjusted Performance

9 of 100

OK

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 fairly weak primary indicators, Mastercard Incorporated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grupo Herdez SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Herdez SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grupo Herdez is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mastercard Incorporated and Grupo Herdez

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

The idea behind Mastercard Incorporated and Grupo Herdez SAB 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 Transaction History module to view history of all your transactions and understand their impact on performance.