Correlation Between Mastercard and State Street
Can any of the company-specific risk be diversified away by investing in both Mastercard and State Street 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 State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and State Street Corp, you can compare the effects of market volatilities on Mastercard and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and State Street.
Diversification Opportunities for Mastercard and State Street
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mastercard and State is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of Mastercard i.e., Mastercard and State Street go up and down completely randomly.
Pair Corralation between Mastercard and State Street
Allowing for the 90-day total investment horizon Mastercard is expected to generate 0.62 times more return on investment than State Street. However, Mastercard is 1.6 times less risky than State Street. It trades about 0.08 of its potential returns per unit of risk. State Street Corp is currently generating about 0.05 per unit of risk. If you would invest 34,344 in Mastercard on August 27, 2024 and sell it today you would earn a total of 17,742 from holding Mastercard or generate 51.66% 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. State Street Corp
Performance |
| Timeline |
| Mastercard |
| State Street Corp |
Mastercard and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and State Street
The main advantage of trading using opposite Mastercard and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Mastercard vs. American Express | Mastercard vs. Morningstar Unconstrained Allocation | Mastercard vs. Sitka Gold Corp | Mastercard vs. MSCI ACWI exAUCONSUMER |
| State Street vs. Northern Trust | State Street vs. Franklin Resources | State Street vs. Invesco Plc | State Street vs. T Rowe Price |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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