Correlation Between Mastercard and Nio
Can any of the company-specific risk be diversified away by investing in both Mastercard and Nio 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 Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Nio Class A, you can compare the effects of market volatilities on Mastercard and Nio 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 Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Nio.
Diversification Opportunities for Mastercard and Nio
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mastercard and Nio is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A 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 Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Mastercard i.e., Mastercard and Nio go up and down completely randomly.
Pair Corralation between Mastercard and Nio
Allowing for the 90-day total investment horizon Mastercard is expected to generate 0.22 times more return on investment than Nio. However, Mastercard is 4.49 times less risky than Nio. It trades about -0.15 of its potential returns per unit of risk. Nio Class A is currently generating about -0.2 per unit of risk. If you would invest 47,538 in Mastercard on January 25, 2024 and sell it today you would lose (1,288) from holding Mastercard or give up 2.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Nio Class A
Performance |
| Timeline |
| Mastercard |
| Nio Class A |
Mastercard and Nio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Nio
The main advantage of trading using opposite Mastercard and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Nio 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 Nio will offset losses from the drop in Nio's long position.| Mastercard vs. Senmiao Technology | Mastercard vs. X Financial Class | Mastercard vs. Yirendai | Mastercard vs. Qudian Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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