Correlation Between Mastercard and Ready Capital
Can any of the company-specific risk be diversified away by investing in both Mastercard and Ready Capital 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 Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Ready Capital Corp, you can compare the effects of market volatilities on Mastercard and Ready Capital 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 Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Ready Capital.
Diversification Opportunities for Mastercard and Ready Capital
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mastercard and Ready is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Ready Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital Corp 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 Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital Corp has no effect on the direction of Mastercard i.e., Mastercard and Ready Capital go up and down completely randomly.
Pair Corralation between Mastercard and Ready Capital
Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.4 times less return on investment than Ready Capital. But when comparing it to its historical volatility, Mastercard is 1.34 times less risky than Ready Capital. It trades about 0.19 of its potential returns per unit of risk. Ready Capital Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 692.00 in Ready Capital Corp on August 30, 2024 and sell it today you would earn a total of 50.00 from holding Ready Capital Corp or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Ready Capital Corp
Performance |
| Timeline |
| Mastercard |
| Ready Capital Corp |
Mastercard and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Ready Capital
The main advantage of trading using opposite Mastercard and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Ready Capital 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 Ready Capital will offset losses from the drop in Ready Capital'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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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