Correlation Between New Oriental and Mastercard Incorporated
Can any of the company-specific risk be diversified away by investing in both New Oriental and Mastercard Incorporated 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 New Oriental and Mastercard Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Mastercard Incorporated, you can compare the effects of market volatilities on New Oriental and Mastercard Incorporated 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 New Oriental with a short position of Mastercard Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Mastercard Incorporated.
Diversification Opportunities for New Oriental and Mastercard Incorporated
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Mastercard is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated and New Oriental 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 New Oriental Education are associated (or correlated) with Mastercard Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard Incorporated has no effect on the direction of New Oriental i.e., New Oriental and Mastercard Incorporated go up and down completely randomly.
Pair Corralation between New Oriental and Mastercard Incorporated
Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Mastercard Incorporated. In addition to that, New Oriental is 1.53 times more volatile than Mastercard Incorporated. It trades about -0.02 of its total potential returns per unit of risk. Mastercard Incorporated is currently generating about 0.12 per unit of volatility. If you would invest 781,631 in Mastercard Incorporated on November 5, 2024 and sell it today you would earn a total of 373,044 from holding Mastercard Incorporated or generate 47.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
New Oriental Education vs. Mastercard Incorporated
Performance |
| Timeline |
| New Oriental Education |
| Mastercard Incorporated |
New Oriental and Mastercard Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Mastercard Incorporated
The main advantage of trading using opposite New Oriental and Mastercard Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Mastercard Incorporated 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 Incorporated will offset losses from the drop in Mastercard Incorporated's long position.| New Oriental vs. Lloyds Banking Group | New Oriental vs. First Republic Bank | New Oriental vs. Genworth Financial | New Oriental vs. CVS Health |
| Mastercard Incorporated vs. Prudential Financial | Mastercard Incorporated vs. Micron Technology | Mastercard Incorporated vs. UnitedHealth Group Incorporated | Mastercard Incorporated vs. DXC Technology |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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