Correlation Between Mastercard and LatAmGrowth SPAC
Can any of the company-specific risk be diversified away by investing in both Mastercard and LatAmGrowth SPAC 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 LatAmGrowth SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and LatAmGrowth SPAC, you can compare the effects of market volatilities on Mastercard and LatAmGrowth SPAC 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 LatAmGrowth SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and LatAmGrowth SPAC.
Diversification Opportunities for Mastercard and LatAmGrowth SPAC
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mastercard and LatAmGrowth is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and LatAmGrowth SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LatAmGrowth SPAC 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 LatAmGrowth SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LatAmGrowth SPAC has no effect on the direction of Mastercard i.e., Mastercard and LatAmGrowth SPAC go up and down completely randomly.
Pair Corralation between Mastercard and LatAmGrowth SPAC
Allowing for the 90-day total investment horizon Mastercard is expected to generate 12.03 times more return on investment than LatAmGrowth SPAC. However, Mastercard is 12.03 times more volatile than LatAmGrowth SPAC. It trades about 0.14 of its potential returns per unit of risk. LatAmGrowth SPAC is currently generating about 0.2 per unit of risk. If you would invest 44,582 in Mastercard on August 29, 2024 and sell it today you would earn a total of 8,656 from holding Mastercard or generate 19.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. LatAmGrowth SPAC
Performance |
| Timeline |
| Mastercard |
| LatAmGrowth SPAC |
Mastercard and LatAmGrowth SPAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and LatAmGrowth SPAC
The main advantage of trading using opposite Mastercard and LatAmGrowth SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, LatAmGrowth SPAC 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 LatAmGrowth SPAC will offset losses from the drop in LatAmGrowth SPAC's long position.| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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