Correlation Between Mastercard and FutureTech

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

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

Diversification Opportunities for Mastercard and FutureTech

0.01

Correlation Coefficient

Mastercard  FutureTech

Significant diversification

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

Pair Corralation between Mastercard and FutureTech

Allowing for the 90-day total investment horizon Mastercard is expected to under-perform the FutureTech. But the stock apears to be less risky and, when comparing its historical volatility, Mastercard is 26.4 times less risky than FutureTech. The stock trades about -0.05 of its potential returns per unit of risk. The FutureTech II Acquisition is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2.34  in FutureTech II Acquisition on December 4, 2024 and sell it today you would lose (0.24) from holding FutureTech II Acquisition or give up 10.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Mastercard  vs.  FutureTech II Acquisition

Mastercard

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 12 (%) 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 April 2025.

FutureTech II Acquisition

Risk-Adjusted Performance

Good

Over the last 90 days FutureTech II Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal forward indicators, FutureTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mastercard and FutureTech

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

The idea behind Mastercard and FutureTech II Acquisition 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.