Correlation Between Mastercard and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Mastercard and IShares MSCI 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 IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and iShares MSCI Global, you can compare the effects of market volatilities on Mastercard and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and IShares MSCI.
Diversification Opportunities for Mastercard and IShares MSCI
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mastercard and IShares is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and iShares MSCI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Global 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Global has no effect on the direction of Mastercard i.e., Mastercard and IShares MSCI go up and down completely randomly.
Pair Corralation between Mastercard and IShares MSCI
Allowing for the 90-day total investment horizon Mastercard is expected to under-perform the IShares MSCI. But the stock apears to be less risky and, when comparing its historical volatility, Mastercard is 1.04 times less risky than IShares MSCI. The stock trades about -0.1 of its potential returns per unit of risk. The iShares MSCI Global is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,813 in iShares MSCI Global on February 6, 2024 and sell it today you would earn a total of 127.00 from holding iShares MSCI Global or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. iShares MSCI Global
Performance |
| Timeline |
| Mastercard |
| iShares MSCI Global |
Mastercard and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and IShares MSCI
The main advantage of trading using opposite Mastercard and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Mastercard vs. American Express | Mastercard vs. Capital One Financial | Mastercard vs. Upstart HoldingsInc | Mastercard vs. Ally Financial |
| IShares MSCI vs. iShares Europe ETF | IShares MSCI vs. iShares Global Financials | IShares MSCI vs. iShares Global Healthcare | IShares MSCI vs. iShares Global Comm |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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