Correlation Between Mastercard and Marex Group
Can any of the company-specific risk be diversified away by investing in both Mastercard and Marex Group 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 Marex Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Marex Group plc, you can compare the effects of market volatilities on Mastercard and Marex Group 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 Marex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Marex Group.
Diversification Opportunities for Mastercard and Marex Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mastercard and Marex is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex Group plc 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 Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of Mastercard i.e., Mastercard and Marex Group go up and down completely randomly.
Pair Corralation between Mastercard and Marex Group
Allowing for the 90-day total investment horizon Mastercard is expected to generate 2.58 times less return on investment than Marex Group. But when comparing it to its historical volatility, Mastercard is 2.2 times less risky than Marex Group. It trades about 0.14 of its potential returns per unit of risk. Marex Group plc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,852 in Marex Group plc on September 2, 2024 and sell it today you would earn a total of 1,076 from holding Marex Group plc or generate 58.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Marex Group plc
Performance |
| Timeline |
| Mastercard |
| Marex Group plc |
Mastercard and Marex Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Marex Group
The main advantage of trading using opposite Mastercard and Marex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Marex Group 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 Marex Group will offset losses from the drop in Marex Group's long position.| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial |
| Marex Group vs. Lazard | Marex Group vs. PJT Partners | Marex Group vs. Houlihan Lokey | Marex Group vs. Perella Weinberg Partners |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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