Correlation Between Microsoft and Mastercard
Can any of the company-specific risk be diversified away by investing in both Microsoft and Mastercard 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 Microsoft and Mastercard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Mastercard, you can compare the effects of market volatilities on Microsoft and Mastercard 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 Microsoft with a short position of Mastercard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Mastercard.
Diversification Opportunities for Microsoft and Mastercard
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Mastercard is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard and Microsoft 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 Microsoft are associated (or correlated) with Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of Microsoft i.e., Microsoft and Mastercard go up and down completely randomly.
Pair Corralation between Microsoft and Mastercard
Given the investment horizon of 90 days Microsoft is expected to generate 1.36 times more return on investment than Mastercard. However, Microsoft is 1.36 times more volatile than Mastercard. It trades about 0.08 of its potential returns per unit of risk. Mastercard is currently generating about 0.08 per unit of risk. If you would invest 24,616 in Microsoft on August 24, 2024 and sell it today you would earn a total of 16,632 from holding Microsoft or generate 67.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Mastercard
Performance |
| Timeline |
| Microsoft |
| Mastercard |
Microsoft and Mastercard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Mastercard
The main advantage of trading using opposite Microsoft and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Mastercard 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 will offset losses from the drop in Mastercard's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |