Correlation Between Mastercard and Blackstone
Can any of the company-specific risk be diversified away by investing in both Mastercard and Blackstone 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 Blackstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Blackstone Group, you can compare the effects of market volatilities on Mastercard and Blackstone 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 Blackstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Blackstone.
Diversification Opportunities for Mastercard and Blackstone
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mastercard and Blackstone is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group 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 Blackstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Group has no effect on the direction of Mastercard i.e., Mastercard and Blackstone go up and down completely randomly.
Pair Corralation between Mastercard and Blackstone
Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.56 times less return on investment than Blackstone. But when comparing it to its historical volatility, Mastercard is 1.88 times less risky than Blackstone. It trades about 0.15 of its potential returns per unit of risk. Blackstone Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,289 in Blackstone Group on January 18, 2024 and sell it today you would earn a total of 2,899 from holding Blackstone Group or generate 31.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Blackstone Group
Performance |
| Timeline |
| Mastercard |
| Blackstone Group |
Mastercard and Blackstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Blackstone
The main advantage of trading using opposite Mastercard and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Blackstone 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 Blackstone will offset losses from the drop in Blackstone's long position.| Mastercard vs. Diamond Hill Investment | Mastercard vs. Distoken Acquisition | Mastercard vs. AllianceBernstein Holding LP | Mastercard vs. Associated Capital Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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