Correlation Between Mastercard and ROCKWOOL International
Can any of the company-specific risk be diversified away by investing in both Mastercard and ROCKWOOL International 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 ROCKWOOL International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and ROCKWOOL International AS, you can compare the effects of market volatilities on Mastercard and ROCKWOOL International 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 ROCKWOOL International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and ROCKWOOL International.
Diversification Opportunities for Mastercard and ROCKWOOL International
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mastercard and ROCKWOOL is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and ROCKWOOL International AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROCKWOOL International 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 ROCKWOOL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROCKWOOL International has no effect on the direction of Mastercard i.e., Mastercard and ROCKWOOL International go up and down completely randomly.
Pair Corralation between Mastercard and ROCKWOOL International
Allowing for the 90-day total investment horizon Mastercard is expected to generate 4.13 times less return on investment than ROCKWOOL International. But when comparing it to its historical volatility, Mastercard is 1.64 times less risky than ROCKWOOL International. It trades about 0.09 of its potential returns per unit of risk. ROCKWOOL International AS is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 183,394 in ROCKWOOL International AS on January 26, 2024 and sell it today you would earn a total of 46,606 from holding ROCKWOOL International AS or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Mastercard vs. ROCKWOOL International AS
Performance |
| Timeline |
| Mastercard |
| ROCKWOOL International |
Mastercard and ROCKWOOL International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and ROCKWOOL International
The main advantage of trading using opposite Mastercard and ROCKWOOL International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, ROCKWOOL International 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 ROCKWOOL International will offset losses from the drop in ROCKWOOL International'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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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