Correlation Between Grupo Hotelero and Mastercard Incorporated
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero 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 Grupo Hotelero and Mastercard Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Hotelero Santa and Mastercard Incorporated, you can compare the effects of market volatilities on Grupo Hotelero 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 Grupo Hotelero with a short position of Mastercard Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and Mastercard Incorporated.
Diversification Opportunities for Grupo Hotelero and Mastercard Incorporated
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grupo and Mastercard is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated and Grupo Hotelero 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 Grupo Hotelero Santa 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 Grupo Hotelero i.e., Grupo Hotelero and Mastercard Incorporated go up and down completely randomly.
Pair Corralation between Grupo Hotelero and Mastercard Incorporated
Assuming the 90 days trading horizon Grupo Hotelero is expected to generate 7.34 times less return on investment than Mastercard Incorporated. In addition to that, Grupo Hotelero is 1.52 times more volatile than Mastercard Incorporated. It trades about 0.01 of its total potential returns per unit of risk. Mastercard Incorporated is currently generating about 0.11 per unit of volatility. If you would invest 1,090,849 in Mastercard Incorporated on October 31, 2024 and sell it today you would earn a total of 34,821 from holding Mastercard Incorporated or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Hotelero Santa vs. Mastercard Incorporated
Performance |
| Timeline |
| Grupo Hotelero Santa |
| Mastercard Incorporated |
Grupo Hotelero and Mastercard Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Hotelero and Mastercard Incorporated
The main advantage of trading using opposite Grupo Hotelero and Mastercard Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero 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.| Grupo Hotelero vs. United States Steel | Grupo Hotelero vs. GMxico Transportes SAB | Grupo Hotelero vs. Capital One Financial | Grupo Hotelero vs. Grupo Sports World |
| Mastercard Incorporated vs. Southern Copper | Mastercard Incorporated vs. Micron Technology | Mastercard Incorporated vs. New Oriental Education | Mastercard Incorporated vs. Monster Beverage Corp |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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