Correlation Between TT Electronics and Mastercard
Can any of the company-specific risk be diversified away by investing in both TT Electronics and Mastercard 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 TT Electronics and Mastercard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and Mastercard, you can compare the effects of market volatilities on TT Electronics and Mastercard 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 TT Electronics with a short position of Mastercard. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and Mastercard.
Diversification Opportunities for TT Electronics and Mastercard
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 7TT and Mastercard is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard and TT Electronics 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 TT Electronics PLC are associated (or correlated) with Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of TT Electronics i.e., TT Electronics and Mastercard go up and down completely randomly.
Pair Corralation between TT Electronics and Mastercard
Assuming the 90 days trading horizon TT Electronics PLC is expected to generate 1.48 times more return on investment than Mastercard. However, TT Electronics is 1.48 times more volatile than Mastercard. It trades about 0.26 of its potential returns per unit of risk. Mastercard is currently generating about 0.01 per unit of risk. If you would invest 85.00 in TT Electronics PLC on April 23, 2025 and sell it today you would earn a total of 34.00 from holding TT Electronics PLC or generate 40.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
TT Electronics PLC vs. Mastercard
Performance |
Timeline |
TT Electronics PLC |
Mastercard |
TT Electronics and Mastercard Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TT Electronics and Mastercard
The main advantage of trading using opposite TT Electronics and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics position performs unexpectedly, Mastercard 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 Mastercard will offset losses from the drop in Mastercard's long position.TT Electronics vs. PSI Software AG | TT Electronics vs. CyberArk Software | TT Electronics vs. Xinhua Winshare Publishing | TT Electronics vs. Grand Canyon Education |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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