Correlation Between Mastercard and OneMain Holdings
Can any of the company-specific risk be diversified away by investing in both Mastercard and OneMain Holdings 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 OneMain Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and OneMain Holdings, you can compare the effects of market volatilities on Mastercard and OneMain Holdings 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 OneMain Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and OneMain Holdings.
Diversification Opportunities for Mastercard and OneMain Holdings
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mastercard and OneMain is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and OneMain Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneMain Holdings 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 OneMain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneMain Holdings has no effect on the direction of Mastercard i.e., Mastercard and OneMain Holdings go up and down completely randomly.
Pair Corralation between Mastercard and OneMain Holdings
Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.37 times less return on investment than OneMain Holdings. But when comparing it to its historical volatility, Mastercard is 1.88 times less risky than OneMain Holdings. It trades about 0.1 of its potential returns per unit of risk. OneMain Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,030 in OneMain Holdings on November 27, 2024 and sell it today you would earn a total of 2,274 from holding OneMain Holdings or generate 75.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. OneMain Holdings
Performance |
| Timeline |
| Mastercard |
| OneMain Holdings |
Mastercard and OneMain Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and OneMain Holdings
The main advantage of trading using opposite Mastercard and OneMain Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, OneMain Holdings 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 OneMain Holdings will offset losses from the drop in OneMain Holdings' long position.| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial |
| OneMain Holdings vs. Oaktree Specialty Lending | OneMain Holdings vs. Barings BDC | OneMain Holdings vs. Runway Growth Finance | OneMain Holdings vs. Ally Financial |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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