Correlation Between GP Investments and Mastercard Incorporated
Can any of the company-specific risk be diversified away by investing in both GP Investments 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 GP Investments and Mastercard Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and Mastercard Incorporated, you can compare the effects of market volatilities on GP Investments 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 GP Investments with a short position of Mastercard Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Mastercard Incorporated.
Diversification Opportunities for GP Investments and Mastercard Incorporated
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GPIV33 and Mastercard is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated and GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and Mastercard Incorporated go up and down completely randomly.
Pair Corralation between GP Investments and Mastercard Incorporated
Assuming the 90 days trading horizon GP Investments is expected to generate 4.21 times less return on investment than Mastercard Incorporated. In addition to that, GP Investments is 2.45 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 0.18 per unit of volatility. If you would invest 7,445 in Mastercard Incorporated on September 1, 2024 and sell it today you would earn a total of 2,896 from holding Mastercard Incorporated or generate 38.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
GP Investments vs. Mastercard Incorporated
Performance |
| Timeline |
| GP Investments |
| Mastercard Incorporated |
GP Investments and Mastercard Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and Mastercard Incorporated
The main advantage of trading using opposite GP Investments and Mastercard Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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.The idea behind GP Investments and Mastercard Incorporated 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.| Mastercard Incorporated vs. Micron Technology | Mastercard Incorporated vs. Take Two Interactive Software | Mastercard Incorporated vs. Marfrig Global Foods | Mastercard Incorporated vs. Metalurgica Gerdau SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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