Correlation Between Mastercard and FirstCash
Can any of the company-specific risk be diversified away by investing in both Mastercard and FirstCash 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 FirstCash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and FirstCash, you can compare the effects of market volatilities on Mastercard and FirstCash 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 FirstCash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and FirstCash.
Diversification Opportunities for Mastercard and FirstCash
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mastercard and FirstCash is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash 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 FirstCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstCash has no effect on the direction of Mastercard i.e., Mastercard and FirstCash go up and down completely randomly.
Pair Corralation between Mastercard and FirstCash
Allowing for the 90-day total investment horizon Mastercard is expected to generate 0.55 times more return on investment than FirstCash. However, Mastercard is 1.82 times less risky than FirstCash. It trades about 0.13 of its potential returns per unit of risk. FirstCash is currently generating about -0.02 per unit of risk. If you would invest 52,188 in Mastercard on September 14, 2024 and sell it today you would earn a total of 1,053 from holding Mastercard or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. FirstCash
Performance |
| Timeline |
| Mastercard |
| FirstCash |
Mastercard and FirstCash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and FirstCash
The main advantage of trading using opposite Mastercard and FirstCash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, FirstCash 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 FirstCash will offset losses from the drop in FirstCash's long position.| Mastercard vs. SoFi Technologies | Mastercard vs. Visa Class A | Mastercard vs. Capital One Financial | Mastercard vs. American Express |
| FirstCash vs. Visa Class A | FirstCash vs. PayPal Holdings | FirstCash vs. Upstart Holdings | FirstCash vs. Mastercard |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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