Correlation Between Mastercard and Lesico
Can any of the company-specific risk be diversified away by investing in both Mastercard and Lesico 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 Lesico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Lesico, you can compare the effects of market volatilities on Mastercard and Lesico 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 Lesico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Lesico.
Diversification Opportunities for Mastercard and Lesico
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mastercard and Lesico is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Lesico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesico 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 Lesico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lesico has no effect on the direction of Mastercard i.e., Mastercard and Lesico go up and down completely randomly.
Pair Corralation between Mastercard and Lesico
Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.7 times less return on investment than Lesico. But when comparing it to its historical volatility, Mastercard is 2.19 times less risky than Lesico. It trades about 0.15 of its potential returns per unit of risk. Lesico is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 25,780 in Lesico on January 18, 2024 and sell it today you would earn a total of 6,910 from holding Lesico or generate 26.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 82.11% |
| Values | Daily Returns |
Mastercard vs. Lesico
Performance |
| Timeline |
| Mastercard |
| Lesico |
Mastercard and Lesico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Lesico
The main advantage of trading using opposite Mastercard and Lesico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Lesico 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 Lesico will offset losses from the drop in Lesico's long position.| Mastercard vs. Diamond Hill Investment | Mastercard vs. Distoken Acquisition | Mastercard vs. AllianceBernstein Holding LP | Mastercard vs. Associated Capital Group |
| Lesico vs. Arad | Lesico vs. Alony Hetz Properties | Lesico vs. Airport City | Lesico vs. Harel Insurance Investments |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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