Correlation Between Mastercard and RF Acquisition

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

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

Diversification Opportunities for Mastercard and RF Acquisition

0.78

Correlation Coefficient

Mastercard  RF Acquisition

Poor diversification

The 3 months correlation between Mastercard and RFAC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and RF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Acquisition Corp 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 RF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Acquisition Corp has no effect on the direction of Mastercard i.e., Mastercard and RF Acquisition go up and down completely randomly.

Pair Corralation between Mastercard and RF Acquisition

Allowing for the 90-day total investment horizon Mastercard is expected to under-perform the RF Acquisition. In addition to that, Mastercard is 2.19 times more volatile than RF Acquisition Corp. It trades about -0.19 of its total potential returns per unit of risk. RF Acquisition Corp is currently generating about -0.12 per unit of volatility. If you would invest  1,147  in RF Acquisition Corp on October 12, 2024 and sell it today you would lose (11.00) from holding RF Acquisition Corp or give up 0.96% of portfolio value over 90 days.

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

Mastercard  vs.  RF Acquisition Corp

Mastercard

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 2 (%) 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.

RF Acquisition Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RF Acquisition Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, RF Acquisition is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mastercard and RF Acquisition

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

The idea behind Mastercard and RF Acquisition Corp 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 CEOs Directory module to screen CEOs from public companies around the world.