Correlation Between Mastercard and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both Mastercard and Consolidated Communications 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 Consolidated Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Consolidated Communications Holdings, you can compare the effects of market volatilities on Mastercard and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Consolidated Communications.
Diversification Opportunities for Mastercard and Consolidated Communications
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mastercard and Consolidated is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Mastercard i.e., Mastercard and Consolidated Communications go up and down completely randomly.
Pair Corralation between Mastercard and Consolidated Communications
Assuming the 90 days horizon Mastercard is expected to generate 0.78 times more return on investment than Consolidated Communications. However, Mastercard is 1.28 times less risky than Consolidated Communications. It trades about 0.09 of its potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.05 per unit of risk. If you would invest 35,957 in Mastercard on September 12, 2024 and sell it today you would earn a total of 14,373 from holding Mastercard or generate 39.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Consolidated Communications Ho
Performance |
| Timeline |
| Mastercard |
| Consolidated Communications |
Mastercard and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Consolidated Communications
The main advantage of trading using opposite Mastercard and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| Mastercard vs. Mastercard | Mastercard vs. American Express | Mastercard vs. ORIX Corporation | Mastercard vs. Superior Plus 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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