Correlation Between Mastercard and Utron
Can any of the company-specific risk be diversified away by investing in both Mastercard and Utron 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 Utron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Utron, you can compare the effects of market volatilities on Mastercard and Utron 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 Utron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Utron.
Diversification Opportunities for Mastercard and Utron
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mastercard and Utron is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Utron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utron 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 Utron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utron has no effect on the direction of Mastercard i.e., Mastercard and Utron go up and down completely randomly.
Pair Corralation between Mastercard and Utron
Allowing for the 90-day total investment horizon Mastercard is expected to generate 4.93 times less return on investment than Utron. But when comparing it to its historical volatility, Mastercard is 3.78 times less risky than Utron. It trades about 0.06 of its potential returns per unit of risk. Utron is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 36,200 in Utron on January 20, 2024 and sell it today you would earn a total of 4,700 from holding Utron or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 83.87% |
| Values | Daily Returns |
Mastercard vs. Utron
Performance |
| Timeline |
| Mastercard |
| Utron |
Mastercard and Utron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Utron
The main advantage of trading using opposite Mastercard and Utron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Utron 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 Utron will offset losses from the drop in Utron's long position.| Mastercard vs. American Express | Mastercard vs. Capital One Financial | Mastercard vs. Upstart HoldingsInc | Mastercard vs. Ally Financial |
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 CEOs Directory module to screen CEOs from public companies around the world.
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