Correlation Between Mastercard and Orix Corp

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

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

Diversification Opportunities for Mastercard and Orix Corp

0.08

Correlation Coefficient

Mastercard  Orix Corp

Significant diversification

The 3 months correlation between Mastercard and Orix is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Orix Corp Ads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orix Corp Ads 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 Orix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orix Corp Ads has no effect on the direction of Mastercard i.e., Mastercard and Orix Corp go up and down completely randomly.

Pair Corralation between Mastercard and Orix Corp

Allowing for the 90-day total investment horizon Mastercard is expected to under-perform the Orix Corp. But the stock apears to be less risky and, when comparing its historical volatility, Mastercard is 1.89 times less risky than Orix Corp. The stock trades about -0.13 of its potential returns per unit of risk. The Orix Corp Ads is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,399  in Orix Corp Ads on March 14, 2024 and sell it today you would earn a total of  597.00  from holding Orix Corp Ads or generate 5.74% return on investment over 90 days.

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

Mastercard  vs.  Orix Corp Ads

Mastercard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mastercard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Orix Corp Ads

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orix Corp Ads are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Orix Corp may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Mastercard and Orix Corp

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

The idea behind Mastercard and Orix Corp Ads 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.