Correlation Between Mastercard and FS Credit
Can any of the company-specific risk be diversified away by investing in both Mastercard and FS Credit 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 FS Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and FS Credit Opportunities, you can compare the effects of market volatilities on Mastercard and FS Credit 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 FS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and FS Credit.
Diversification Opportunities for Mastercard and FS Credit
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mastercard and FSCO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and FS Credit Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Credit Opportunities 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 FS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Credit Opportunities has no effect on the direction of Mastercard i.e., Mastercard and FS Credit go up and down completely randomly.
Pair Corralation between Mastercard and FS Credit
Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.24 times more return on investment than FS Credit. However, Mastercard is 1.24 times more volatile than FS Credit Opportunities. It trades about 0.24 of its potential returns per unit of risk. FS Credit Opportunities is currently generating about 0.17 per unit of risk. If you would invest 50,808 in Mastercard on September 2, 2024 and sell it today you would earn a total of 2,486 from holding Mastercard or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. FS Credit Opportunities
Performance |
| Timeline |
| Mastercard |
| FS Credit Opportunities |
Mastercard and FS Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and FS Credit
The main advantage of trading using opposite Mastercard and FS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, FS Credit 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 FS Credit will offset losses from the drop in FS Credit's long position.| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial |
| FS Credit vs. MFS Investment Grade | FS Credit vs. Invesco High Income | FS Credit vs. Eaton Vance National | FS Credit vs. Federated Premier Municipal |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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