Correlation Between ETRADE Financial and Mastercard

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

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

Diversification Opportunities for ETRADE Financial and Mastercard

0.0

Correlation Coefficient

ETRADE Financial  Mastercard

Pay attention - limited upside

The 3 months correlation between ETRADE and Mastercard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ETRADE Financial LLC and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard and ETRADE Financial 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 ETRADE Financial LLC 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 ETRADE Financial i.e., ETRADE Financial and Mastercard go up and down completely randomly.

Pair Corralation between ETRADE Financial and Mastercard

If you would invest (100.00) in ETRADE Financial LLC on February 4, 2024 and sell it today you would earn a total of  100.00  from holding ETRADE Financial LLC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ETRADE Financial LLC  vs.  Mastercard

ETRADE Financial LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRADE Financial LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ETRADE Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mastercard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mastercard has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with ETRADE Financial and Mastercard

The main advantage of trading using opposite ETRADE Financial and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRADE Financial 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 ETRADE Financial LLC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.