Correlation Between Mastercard and BlackRock Investment

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

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

Diversification Opportunities for Mastercard and BlackRock Investment

-0.7

Correlation Coefficient

Mastercard  BlackRock Investment

Excellent diversification

The 3 months correlation between Mastercard and BlackRock is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and BlackRock Investment Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Investment 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 BlackRock Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Investment has no effect on the direction of Mastercard i.e., Mastercard and BlackRock Investment go up and down completely randomly.

Pair Corralation between Mastercard and BlackRock Investment

Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.43 times more return on investment than BlackRock Investment. However, Mastercard is 1.43 times more volatile than BlackRock Investment Quality. It trades about 0.12 of its potential returns per unit of risk. BlackRock Investment Quality is currently generating about -0.37 per unit of risk. If you would invest  49,572  in Mastercard on October 1, 2024 and sell it today you would earn a total of  3,648  from holding Mastercard or generate 7.36% return on investment over 90 days.

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

Mastercard  vs.  BlackRock Investment Quality

Mastercard

Risk-Adjusted Performance

9 of 100

OK

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

BlackRock Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Investment Quality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Mastercard and BlackRock Investment

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

The idea behind Mastercard and BlackRock Investment Quality 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.