Correlation Between Mastercard and Scope Metals
Can any of the company-specific risk be diversified away by investing in both Mastercard and Scope Metals 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 Scope Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Scope Metals Group, you can compare the effects of market volatilities on Mastercard and Scope Metals 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 Scope Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Scope Metals.
Diversification Opportunities for Mastercard and Scope Metals
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mastercard and Scope is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Scope Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scope Metals 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 Scope Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scope Metals Group has no effect on the direction of Mastercard i.e., Mastercard and Scope Metals go up and down completely randomly.
Pair Corralation between Mastercard and Scope Metals
Allowing for the 90-day total investment horizon Mastercard is expected to generate 223.38 times less return on investment than Scope Metals. But when comparing it to its historical volatility, Mastercard is 1.95 times less risky than Scope Metals. It trades about 0.0 of its potential returns per unit of risk. Scope Metals Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,090,000 in Scope Metals Group on February 12, 2024 and sell it today you would earn a total of 155,000 from holding Scope Metals Group or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.56% |
| Values | Daily Returns |
Mastercard vs. Scope Metals Group
Performance |
| Timeline |
| Mastercard |
| Scope Metals Group |
Mastercard and Scope Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Scope Metals
The main advantage of trading using opposite Mastercard and Scope Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Scope Metals 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 Scope Metals will offset losses from the drop in Scope Metals' long position.| Mastercard vs. American Express | Mastercard vs. Capital One Financial | Mastercard vs. Upstart HoldingsInc | Mastercard vs. Ally Financial |
| Scope Metals vs. Delek Automotive Systems | Scope Metals vs. Kerur Holdings | Scope Metals vs. Neto ME Holdings | Scope Metals vs. Bank Leumi Le Israel |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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