Correlation Between American Express and Mitsubishi UFJ

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

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

Diversification Opportunities for American Express and Mitsubishi UFJ

-0.29

Correlation Coefficient

American Express  Mitsubishi UFJ

Very good diversification

The 3 months correlation between American and Mitsubishi is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding American Express 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 American Express 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 American Express 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 American Express i.e., American Express and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between American Express and Mitsubishi UFJ

Considering the 90-day investment horizon American Express is expected to generate 7.79 times less return on investment than Mitsubishi UFJ. But when comparing it to its historical volatility, American Express is 2.47 times less risky than Mitsubishi UFJ. It trades about 0.0 of its potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,354  in Mitsubishi UFJ Lease on December 2, 2024 and sell it today you would lose (4.00) from holding Mitsubishi UFJ Lease or give up 0.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.05%
Values	Daily Returns

American Express  vs.  Mitsubishi UFJ Lease

American Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American Express is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Mitsubishi UFJ Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Lease are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mitsubishi UFJ is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Express and Mitsubishi UFJ

The main advantage of trading using opposite American Express and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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 American Express 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.