Correlation Between Mastermind and Cardlytics

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

By analyzing existing cross correlation between Mastermind and Cardlytics, you can compare the effects of market volatilities on Mastermind and Cardlytics 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 Mastermind with a short position of Cardlytics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastermind and Cardlytics.

Diversification Opportunities for Mastermind and Cardlytics

-0.04

Correlation Coefficient

Mastermind  Cardlytics

Good diversification

The 3 months correlation between Mastermind and Cardlytics is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Mastermind and Cardlytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardlytics and Mastermind 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 Mastermind are associated (or correlated) with Cardlytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardlytics has no effect on the direction of Mastermind i.e., Mastermind and Cardlytics go up and down completely randomly.

Pair Corralation between Mastermind and Cardlytics

Given the investment horizon of 90 days Mastermind is expected to generate 5.68 times more return on investment than Cardlytics. However, Mastermind is 5.68 times more volatile than Cardlytics. It trades about 0.06 of its potential returns per unit of risk. Cardlytics is currently generating about -0.03 per unit of risk. If you would invest  6.00  in Mastermind on September 26, 2024 and sell it today you would lose (1.00) from holding Mastermind or give up 16.67% of portfolio value over 90 days.

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

Mastermind  vs.  Cardlytics

Mastermind

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mastermind are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Mastermind exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cardlytics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardlytics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Cardlytics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mastermind and Cardlytics

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

The idea behind Mastermind and Cardlytics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.