Correlation Between Oaktree Specialty and Mastercard

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

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

Diversification Opportunities for Oaktree Specialty and Mastercard

-0.14

Correlation Coefficient

Oaktree Specialty  Mastercard

Good diversification

The 3 months correlation between Oaktree and Mastercard is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Oaktree Specialty Lending and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard and Oaktree Specialty 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 Oaktree Specialty Lending are associated (or correlated) with Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of Oaktree Specialty i.e., Oaktree Specialty and Mastercard go up and down completely randomly.

Pair Corralation between Oaktree Specialty and Mastercard

Given the investment horizon of 90 days Oaktree Specialty Lending is expected to under-perform the Mastercard. In addition to that, Oaktree Specialty is 1.08 times more volatile than Mastercard. It trades about -0.16 of its total potential returns per unit of risk. Mastercard is currently generating about 0.03 per unit of volatility. If you would invest  52,660  in Mastercard on September 24, 2024 and sell it today you would earn a total of  236.00  from holding Mastercard or generate 0.45% return on investment over 90 days.

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

Oaktree Specialty Lending  vs.  Mastercard

Oaktree Specialty Lending

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oaktree Specialty Lending has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Oaktree Specialty is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Mastercard

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 11 (%) 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 January 2025.

Pair Trading with Oaktree Specialty and Mastercard

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

The idea behind Oaktree Specialty Lending and Mastercard 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.