Correlation Between Mastercard and PIMCO 1

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Can any of the company-specific risk be diversified away by investing in both Mastercard and PIMCO 1 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 PIMCO 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and PIMCO 1 5 Year, you can compare the effects of market volatilities on Mastercard and PIMCO 1 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 PIMCO 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and PIMCO 1.

Diversification Opportunities for Mastercard and PIMCO 1

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Mastercard and PIMCO is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and PIMCO 1-5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO 1-5 Year 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 PIMCO 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO 1-5 Year has no effect on the direction of Mastercard i.e., Mastercard and PIMCO 1 go up and down completely randomly.

Pair Corralation between Mastercard and PIMCO 1

Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.13 times less return on investment than PIMCO 1. In addition to that, Mastercard is 7.01 times more volatile than PIMCO 1 5 Year. It trades about 0.04 of its total potential returns per unit of risk. PIMCO 1 5 Year is currently generating about 0.28 per unit of volatility. If you would invest  5,116  in PIMCO 1 5 Year on December 30, 2023 and sell it today you would earn a total of  37.00  from holding PIMCO 1 5 Year or generate 0.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Mastercard  vs.  PIMCO 1-5 Year

 Performance 
       Timeline  
Mastercard 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Mastercard sustained solid returns over the last few months and may actually be approaching a breakup point.
PIMCO 1-5 Year 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO 1 5 Year are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, PIMCO 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Mastercard and PIMCO 1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mastercard and PIMCO 1

The main advantage of trading using opposite Mastercard and PIMCO 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, PIMCO 1 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 PIMCO 1 will offset losses from the drop in PIMCO 1's long position.
The idea behind Mastercard and PIMCO 1 5 Year 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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