Correlation Between Mastercard and Blackrock Multi

Can any of the company-specific risk be diversified away by investing in both Mastercard and Blackrock Multi 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 Blackrock Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mastercard and Blackrock Multi Sector, you can compare the effects of market volatilities on Mastercard and Blackrock Multi 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 Blackrock Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Blackrock Multi.

Diversification Opportunities for Mastercard and Blackrock Multi

0.79

Correlation Coefficient

Mastercard  Blackrock Multi

Poor diversification

The 3 months correlation between Mastercard and Blackrock is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Blackrock Multi Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Multi Sector 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 Blackrock Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Multi Sector has no effect on the direction of Mastercard i.e., Mastercard and Blackrock Multi go up and down completely randomly.

Pair Corralation between Mastercard and Blackrock Multi

Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.49 times more return on investment than Blackrock Multi. However, Mastercard is 1.49 times more volatile than Blackrock Multi Sector. It trades about 0.05 of its potential returns per unit of risk. Blackrock Multi Sector is currently generating about 0.04 per unit of risk. If you would invest  34,909  in Mastercard on January 25, 2024 and sell it today you would earn a total of  11,373  from holding Mastercard or generate 32.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Mastercard  vs.  Blackrock Multi Sector

Mastercard

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mastercard may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Blackrock Multi Sector

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Multi Sector are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Blackrock Multi is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mastercard and Blackrock Multi

The main advantage of trading using opposite Mastercard and Blackrock Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Blackrock Multi 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 Blackrock Multi will offset losses from the drop in Blackrock Multi's long position.

The idea behind Mastercard and Blackrock Multi Sector pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.