Correlation Between Mastercard and Macys
Can any of the company-specific risk be diversified away by investing in both Mastercard and Macys 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 and Macys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Macys Inc, you can compare the effects of market volatilities on Mastercard and Macys 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 with a short position of Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Macys.
Diversification Opportunities for Mastercard and Macys
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mastercard and Macys is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc and Mastercard 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 are associated (or correlated) with Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of Mastercard i.e., Mastercard and Macys go up and down completely randomly.
Pair Corralation between Mastercard and Macys
Allowing for the 90-day total investment horizon Mastercard is expected to generate 0.28 times more return on investment than Macys. However, Mastercard is 3.59 times less risky than Macys. It trades about 0.03 of its potential returns per unit of risk. Macys Inc is currently generating about -0.01 per unit of risk. If you would invest 45,113 in Mastercard on January 20, 2024 and sell it today you would earn a total of 426.00 from holding Mastercard or generate 0.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Mastercard vs. Macys Inc
Performance |
Timeline |
Mastercard |
Macys Inc |
Mastercard and Macys Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mastercard and Macys
The main advantage of trading using opposite Mastercard and Macys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Macys 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 Macys will offset losses from the drop in Macys' long position.Mastercard vs. American Express | Mastercard vs. Capital One Financial | Mastercard vs. Upstart HoldingsInc | Mastercard vs. Ally Financial |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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