Correlation Between Mastercard and IShares MSCI

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

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

Diversification Opportunities for Mastercard and IShares MSCI

0.07

Correlation Coefficient

Mastercard  IShares MSCI

Significant diversification

The 3 months correlation between Mastercard and IShares is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and iShares MSCI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Global 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Global has no effect on the direction of Mastercard i.e., Mastercard and IShares MSCI go up and down completely randomly.

Pair Corralation between Mastercard and IShares MSCI

Allowing for the 90-day total investment horizon Mastercard is expected to generate 3.03 times less return on investment than IShares MSCI. In addition to that, Mastercard is 1.08 times more volatile than iShares MSCI Global. It trades about 0.04 of its total potential returns per unit of risk. iShares MSCI Global is currently generating about 0.13 per unit of volatility. If you would invest  7,621  in iShares MSCI Global on February 19, 2024 and sell it today you would earn a total of  513.00  from holding iShares MSCI Global or generate 6.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Mastercard  vs.  iShares MSCI Global

Mastercard

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mastercard is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

iShares MSCI Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Mastercard and IShares MSCI

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

The idea behind Mastercard and iShares MSCI Global 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.