Correlation Between Air Lease and Mitsubishi UFJ

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

By analyzing existing cross correlation between Air Lease and Mitsubishi UFJ Lease, you can compare the effects of market volatilities on Air Lease and Mitsubishi UFJ 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 Air Lease with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Mitsubishi UFJ.

Diversification Opportunities for Air Lease and Mitsubishi UFJ

-0.14

Correlation Coefficient

Air Lease  Mitsubishi UFJ

Good diversification

The 3 months correlation between Air and Mitsubishi is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Mitsubishi UFJ Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Lease and Air Lease 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 Air Lease are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Lease has no effect on the direction of Air Lease i.e., Air Lease and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Air Lease and Mitsubishi UFJ

Allowing for the 90-day total investment horizon Air Lease is expected to generate 3.22 times less return on investment than Mitsubishi UFJ. But when comparing it to its historical volatility, Air Lease is 1.59 times less risky than Mitsubishi UFJ. It trades about 0.03 of its potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,283  in Mitsubishi UFJ Lease on December 28, 2024 and sell it today you would earn a total of  112.00  from holding Mitsubishi UFJ Lease or generate 8.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.33%
Values	Daily Returns

Air Lease  vs.  Mitsubishi UFJ Lease

Air Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Mitsubishi UFJ Lease

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Mitsubishi UFJ showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and Mitsubishi UFJ

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

The idea behind Air Lease and Mitsubishi UFJ Lease 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..