Correlation Between Mastercard and Bitcoin Depot

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

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

Diversification Opportunities for Mastercard and Bitcoin Depot

-0.01

Correlation Coefficient

Mastercard  Bitcoin Depot

Good diversification

The 3 months correlation between Mastercard and Bitcoin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Bitcoin Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Depot 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 Bitcoin Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Depot has no effect on the direction of Mastercard i.e., Mastercard and Bitcoin Depot go up and down completely randomly.

Pair Corralation between Mastercard and Bitcoin Depot

Allowing for the 90-day total investment horizon Mastercard is expected to generate 0.11 times more return on investment than Bitcoin Depot. However, Mastercard is 9.14 times less risky than Bitcoin Depot. It trades about 0.09 of its potential returns per unit of risk. Bitcoin Depot is currently generating about 0.01 per unit of risk. If you would invest  53,214  in Mastercard on November 29, 2024 and sell it today you would earn a total of  2,913  from holding Mastercard or generate 5.47% return on investment over 90 days.

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

Mastercard  vs.  Bitcoin Depot

Mastercard

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mastercard is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bitcoin Depot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bitcoin Depot is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mastercard and Bitcoin Depot

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

The idea behind Mastercard and Bitcoin Depot 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.