Correlation Between Mastercard and Value Line
Can any of the company-specific risk be diversified away by investing in both Mastercard and Value Line 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 Value Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Value Line, you can compare the effects of market volatilities on Mastercard and Value Line 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 Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Value Line.
Diversification Opportunities for Mastercard and Value Line
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mastercard and Value is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Value Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line has no effect on the direction of Mastercard i.e., Mastercard and Value Line go up and down completely randomly.
Pair Corralation between Mastercard and Value Line
Allowing for the 90-day total investment horizon Mastercard is expected to generate 0.58 times more return on investment than Value Line. However, Mastercard is 1.71 times less risky than Value Line. It trades about 0.01 of its potential returns per unit of risk. Value Line is currently generating about -0.09 per unit of risk. If you would invest 50,821 in Mastercard on January 14, 2025 and sell it today you would earn a total of 154.00 from holding Mastercard or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Mastercard vs. Value Line
Performance |
| Timeline |
| Mastercard |
| Value Line |
Mastercard and Value Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Value Line
The main advantage of trading using opposite Mastercard and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Value Line 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 Value Line will offset losses from the drop in Value Line's long position.| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial |
| Value Line vs. Dun Bradstreet Holdings | Value Line vs. FactSet Research Systems | Value Line vs. Moodys | Value Line vs. MSCI Inc |
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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