Correlation Between Mastercard and Moelis

Can any of the company-specific risk be diversified away by investing in both Mastercard and Moelis 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 Moelis into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mastercard and Moelis Co, you can compare the effects of market volatilities on Mastercard and Moelis 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 Moelis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Moelis.

Diversification Opportunities for Mastercard and Moelis

0.78

Correlation Coefficient

Mastercard  Moelis

Poor diversification

The 3 months correlation between Mastercard and Moelis is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Moelis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moelis 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 Moelis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moelis has no effect on the direction of Mastercard i.e., Mastercard and Moelis go up and down completely randomly.

Pair Corralation between Mastercard and Moelis

Allowing for the 90-day total investment horizon Mastercard is expected to generate 2.07 times less return on investment than Moelis. But when comparing it to its historical volatility, Mastercard is 1.85 times less risky than Moelis. It trades about 0.09 of its potential returns per unit of risk. Moelis Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,314  in Moelis Co on August 7, 2024 and sell it today you would earn a total of  1,260  from holding Moelis Co or generate 23.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Mastercard  vs.  Moelis Co

Mastercard

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mastercard may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Moelis

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moelis Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Moelis may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Mastercard and Moelis

The main advantage of trading using opposite Mastercard and Moelis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Moelis 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 Moelis will offset losses from the drop in Moelis' long position.

The idea behind Mastercard and Moelis Co 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..