Correlation Between Marfrig Global and Mastercard Incorporated
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Mastercard Incorporated 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 Marfrig Global and Mastercard Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marfrig Global Foods and Mastercard Incorporated, you can compare the effects of market volatilities on Marfrig Global and Mastercard Incorporated 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 Marfrig Global with a short position of Mastercard Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Mastercard Incorporated.
Diversification Opportunities for Marfrig Global and Mastercard Incorporated
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marfrig and Mastercard is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with Mastercard Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard Incorporated has no effect on the direction of Marfrig Global i.e., Marfrig Global and Mastercard Incorporated go up and down completely randomly.
Pair Corralation between Marfrig Global and Mastercard Incorporated
Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 1.4 times more return on investment than Mastercard Incorporated. However, Marfrig Global is 1.4 times more volatile than Mastercard Incorporated. It trades about 0.35 of its potential returns per unit of risk. Mastercard Incorporated is currently generating about 0.24 per unit of risk. If you would invest 1,569 in Marfrig Global Foods on September 1, 2024 and sell it today you would earn a total of 308.00 from holding Marfrig Global Foods or generate 19.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Marfrig Global Foods vs. Mastercard Incorporated
Performance |
| Timeline |
| Marfrig Global Foods |
| Mastercard Incorporated |
Marfrig Global and Mastercard Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Mastercard Incorporated
The main advantage of trading using opposite Marfrig Global and Mastercard Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Mastercard Incorporated 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 Mastercard Incorporated will offset losses from the drop in Mastercard Incorporated's long position.| Marfrig Global vs. Companhia Siderrgica Nacional | Marfrig Global vs. Cyrela Brazil Realty | Marfrig Global vs. Fras le SA | Marfrig Global vs. Energisa SA |
| Mastercard Incorporated vs. Micron Technology | Mastercard Incorporated vs. Take Two Interactive Software | Mastercard Incorporated vs. Marfrig Global Foods | Mastercard Incorporated vs. Metalurgica Gerdau SA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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