Correlation Between Mastercard and Bridge Investment
Can any of the company-specific risk be diversified away by investing in both Mastercard and Bridge Investment 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 Bridge Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Bridge Investment Group, you can compare the effects of market volatilities on Mastercard and Bridge Investment 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 Bridge Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Bridge Investment.
Diversification Opportunities for Mastercard and Bridge Investment
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mastercard and Bridge is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Bridge Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Investment 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 Bridge Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Investment has no effect on the direction of Mastercard i.e., Mastercard and Bridge Investment go up and down completely randomly.
Pair Corralation between Mastercard and Bridge Investment
Allowing for the 90-day total investment horizon Mastercard is expected to generate 0.33 times more return on investment than Bridge Investment. However, Mastercard is 2.99 times less risky than Bridge Investment. It trades about 0.3 of its potential returns per unit of risk. Bridge Investment Group is currently generating about -0.13 per unit of risk. If you would invest 49,959 in Mastercard on September 1, 2024 and sell it today you would earn a total of 3,335 from holding Mastercard or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Bridge Investment Group
Performance |
| Timeline |
| Mastercard |
| Bridge Investment |
Mastercard and Bridge Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Bridge Investment
The main advantage of trading using opposite Mastercard and Bridge Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Bridge Investment 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 Bridge Investment will offset losses from the drop in Bridge Investment's long position.| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial |
| Bridge Investment vs. Federated Premier Municipal | Bridge Investment vs. Blackrock Muniyield | Bridge Investment vs. Diamond Hill Investment | Bridge Investment vs. NXG NextGen Infrastructure |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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