Correlation Between Mastercard and Cipher Mining
Can any of the company-specific risk be diversified away by investing in both Mastercard and Cipher Mining 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 Cipher Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Cipher Mining, you can compare the effects of market volatilities on Mastercard and Cipher Mining 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 Cipher Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Cipher Mining.
Diversification Opportunities for Mastercard and Cipher Mining
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mastercard and Cipher is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining 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 Cipher Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipher Mining has no effect on the direction of Mastercard i.e., Mastercard and Cipher Mining go up and down completely randomly.
Pair Corralation between Mastercard and Cipher Mining
Allowing for the 90-day total investment horizon Mastercard is expected to generate 5.08 times less return on investment than Cipher Mining. But when comparing it to its historical volatility, Mastercard is 7.31 times less risky than Cipher Mining. It trades about 0.11 of its potential returns per unit of risk. Cipher Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 229.00 in Cipher Mining on August 31, 2024 and sell it today you would earn a total of 441.00 from holding Cipher Mining or generate 192.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Cipher Mining
Performance |
| Timeline |
| Mastercard |
| Cipher Mining |
Mastercard and Cipher Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Cipher Mining
The main advantage of trading using opposite Mastercard and Cipher Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Cipher Mining 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 Cipher Mining will offset losses from the drop in Cipher Mining's long position.| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial |
| Cipher Mining vs. Iris Energy | Cipher Mining vs. CleanSpark | Cipher Mining vs. Stronghold Digital Mining | Cipher Mining vs. Bitfarms |
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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