Correlation Between Ross Stores and Mastercard Incorporated
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and Mastercard Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Mastercard Incorporated, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of Mastercard Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Mastercard Incorporated.
Diversification Opportunities for Ross Stores and Mastercard Incorporated
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ross and Mastercard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and Mastercard Incorporated go up and down completely randomly.
Pair Corralation between Ross Stores and Mastercard Incorporated
Assuming the 90 days trading horizon Ross Stores is expected to under-perform the Mastercard Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 1.23 times less risky than Mastercard Incorporated. The stock trades about -0.09 of its potential returns per unit of risk. The Mastercard Incorporated is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,412 in Mastercard Incorporated on October 1, 2024 and sell it today you would earn a total of 304.00 from holding Mastercard Incorporated or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Mastercard Incorporated
Performance |
| Timeline |
| Ross Stores |
| Mastercard Incorporated |
Ross Stores and Mastercard Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Mastercard Incorporated
The main advantage of trading using opposite Ross Stores and Mastercard Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. Gerdau SA | Ross Stores vs. Morgan Stanley | Ross Stores vs. Capital One Financial | Ross Stores vs. Honeywell International |
| Mastercard Incorporated vs. Visa Inc | Mastercard Incorporated vs. American Express | Mastercard Incorporated vs. PayPal Holdings | Mastercard Incorporated vs. The Western Union |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |