Correlation Between Mastercard and Gabelli MultiMedia

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

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

Diversification Opportunities for Mastercard and Gabelli MultiMedia

0.49

Correlation Coefficient

Mastercard  Gabelli MultiMedia

Very weak diversification

The 3 months correlation between Mastercard and Gabelli is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Gabelli MultiMedia Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli MultiMedia Mutual 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 Gabelli MultiMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli MultiMedia Mutual has no effect on the direction of Mastercard i.e., Mastercard and Gabelli MultiMedia go up and down completely randomly.

Pair Corralation between Mastercard and Gabelli MultiMedia

Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.44 times less return on investment than Gabelli MultiMedia. In addition to that, Mastercard is 1.55 times more volatile than Gabelli MultiMedia Mutual. It trades about 0.09 of its total potential returns per unit of risk. Gabelli MultiMedia Mutual is currently generating about 0.2 per unit of volatility. If you would invest  426.00  in Gabelli MultiMedia Mutual on December 29, 2024 and sell it today you would earn a total of  41.00  from holding Gabelli MultiMedia Mutual or generate 9.62% return on investment over 90 days.

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

Mastercard  vs.  Gabelli MultiMedia Mutual

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 weak basic indicators, Mastercard may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gabelli MultiMedia Mutual

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli MultiMedia Mutual are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Gabelli MultiMedia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mastercard and Gabelli MultiMedia

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

The idea behind Mastercard and Gabelli MultiMedia Mutual 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.