Correlation Between Mastercard Incorporated and Credit Acceptance
Can any of the company-specific risk be diversified away by investing in both Mastercard Incorporated and Credit Acceptance 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 Incorporated and Credit Acceptance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard Incorporated and Credit Acceptance, you can compare the effects of market volatilities on Mastercard Incorporated and Credit Acceptance 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 Incorporated with a short position of Credit Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard Incorporated and Credit Acceptance.
Diversification Opportunities for Mastercard Incorporated and Credit Acceptance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mastercard and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard Incorporated and Credit Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Acceptance and Mastercard Incorporated 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 Incorporated are associated (or correlated) with Credit Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Acceptance has no effect on the direction of Mastercard Incorporated i.e., Mastercard Incorporated and Credit Acceptance go up and down completely randomly.
Pair Corralation between Mastercard Incorporated and Credit Acceptance
If you would invest 9,650 in Mastercard Incorporated on September 22, 2024 and sell it today you would earn a total of 727.00 from holding Mastercard Incorporated or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard Incorporated vs. Credit Acceptance
Performance |
| Timeline |
| Mastercard Incorporated |
| Credit Acceptance |
Mastercard Incorporated and Credit Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard Incorporated and Credit Acceptance
The main advantage of trading using opposite Mastercard Incorporated and Credit Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard Incorporated position performs unexpectedly, Credit Acceptance 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 Credit Acceptance will offset losses from the drop in Credit Acceptance's long position.| Mastercard Incorporated vs. Ross Stores | Mastercard Incorporated vs. Technos SA | Mastercard Incorporated vs. Dell Technologies | Mastercard Incorporated vs. Electronic Arts |
| Credit Acceptance vs. Visa Inc | Credit Acceptance vs. Mastercard Incorporated | Credit Acceptance vs. American Express | Credit Acceptance vs. PayPal Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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