Correlation Between KAUFMAN ET and Mastercard
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET and Mastercard 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 KAUFMAN ET and Mastercard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and Mastercard, you can compare the effects of market volatilities on KAUFMAN ET and Mastercard 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 KAUFMAN ET with a short position of Mastercard. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Mastercard.
Diversification Opportunities for KAUFMAN ET and Mastercard
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KAUFMAN and Mastercard is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard and KAUFMAN ET 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 KAUFMAN ET BROAD are associated (or correlated) with Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and Mastercard go up and down completely randomly.
Pair Corralation between KAUFMAN ET and Mastercard
Assuming the 90 days trading horizon KAUFMAN ET is expected to generate 1.89 times less return on investment than Mastercard. In addition to that, KAUFMAN ET is 1.82 times more volatile than Mastercard. It trades about 0.03 of its total potential returns per unit of risk. Mastercard is currently generating about 0.1 per unit of volatility. If you would invest 38,418 in Mastercard on September 4, 2024 and sell it today you would earn a total of 11,822 from holding Mastercard or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. Mastercard
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| Mastercard |
KAUFMAN ET and Mastercard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and Mastercard
The main advantage of trading using opposite KAUFMAN ET and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET position performs unexpectedly, Mastercard 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 Mastercard will offset losses from the drop in Mastercard's long position.| KAUFMAN ET vs. MeVis Medical Solutions | KAUFMAN ET vs. MEDICAL FACILITIES NEW | KAUFMAN ET vs. Media and Games | KAUFMAN ET vs. Penn National Gaming |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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