Correlation Between StoneCo and Marqeta
Can any of the company-specific risk be diversified away by investing in both StoneCo and Marqeta 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 StoneCo and Marqeta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between StoneCo and Marqeta, you can compare the effects of market volatilities on StoneCo and Marqeta 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 StoneCo with a short position of Marqeta. Check out your portfolio center. Please also check ongoing floating volatility patterns of StoneCo and Marqeta.
Diversification Opportunities for StoneCo and Marqeta
Poor diversification
The 3 months correlation between StoneCo and Marqeta is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding StoneCo and Marqeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marqeta and StoneCo 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 StoneCo are associated (or correlated) with Marqeta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marqeta has no effect on the direction of StoneCo i.e., StoneCo and Marqeta go up and down completely randomly.
Pair Corralation between StoneCo and Marqeta
Given the investment horizon of 90 days StoneCo is expected to generate 1.4 times more return on investment than Marqeta. However, StoneCo is 1.4 times more volatile than Marqeta. It trades about 0.13 of its potential returns per unit of risk. Marqeta is currently generating about 0.1 per unit of risk. If you would invest 809.00 in StoneCo on October 23, 2024 and sell it today you would earn a total of 47.00 from holding StoneCo or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
StoneCo vs. Marqeta
Performance |
| Timeline |
| StoneCo |
| Marqeta |
StoneCo and Marqeta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with StoneCo and Marqeta
The main advantage of trading using opposite StoneCo and Marqeta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StoneCo position performs unexpectedly, Marqeta 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 Marqeta will offset losses from the drop in Marqeta's long position.The idea behind StoneCo and Marqeta pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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