Correlation Between Mastercard and AGF AS
Can any of the company-specific risk be diversified away by investing in both Mastercard and AGF AS 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 AGF AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and AGF AS, you can compare the effects of market volatilities on Mastercard and AGF AS 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 AGF AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and AGF AS.
Diversification Opportunities for Mastercard and AGF AS
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mastercard and AGF is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and AGF AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF AS 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 AGF AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF AS has no effect on the direction of Mastercard i.e., Mastercard and AGF AS go up and down completely randomly.
Pair Corralation between Mastercard and AGF AS
Allowing for the 90-day total investment horizon Mastercard is expected to under-perform the AGF AS. But the stock apears to be less risky and, when comparing its historical volatility, Mastercard is 1.18 times less risky than AGF AS. The stock trades about -0.38 of its potential returns per unit of risk. The AGF AS is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 64.00 in AGF AS on January 20, 2024 and sell it today you would lose (1.00) from holding AGF AS or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Mastercard vs. AGF AS
Performance |
| Timeline |
| Mastercard |
| AGF AS |
Mastercard and AGF AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and AGF AS
The main advantage of trading using opposite Mastercard and AGF AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, AGF AS 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 AGF AS will offset losses from the drop in AGF AS's long position.| Mastercard vs. American Express | Mastercard vs. Capital One Financial | Mastercard vs. Upstart HoldingsInc | Mastercard vs. Ally Financial |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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