Correlation Between Mastercard and KKR Co
Can any of the company-specific risk be diversified away by investing in both Mastercard and KKR Co 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 KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and KKR Co LP, you can compare the effects of market volatilities on Mastercard and KKR Co 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 KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and KKR Co.
Diversification Opportunities for Mastercard and KKR Co
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mastercard and KKR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Mastercard i.e., Mastercard and KKR Co go up and down completely randomly.
Pair Corralation between Mastercard and KKR Co
Allowing for the 90-day total investment horizon Mastercard is expected to generate 2.66 times less return on investment than KKR Co. But when comparing it to its historical volatility, Mastercard is 2.04 times less risky than KKR Co. It trades about 0.14 of its potential returns per unit of risk. KKR Co LP is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 10,103 in KKR Co LP on September 2, 2024 and sell it today you would earn a total of 6,184 from holding KKR Co LP or generate 61.21% 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. KKR Co LP
Performance |
| Timeline |
| Mastercard |
| KKR Co LP |
Mastercard and KKR Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and KKR Co
The main advantage of trading using opposite Mastercard and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, KKR Co 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 KKR Co will offset losses from the drop in KKR Co's long position.| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial |
| KKR Co vs. Carlyle Group | KKR Co vs. Ares Management LP | KKR Co vs. Blackstone Group | KKR Co vs. Blue Owl Capital |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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