Correlation Between Check Point and Mitsubishi UFJ

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

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

Diversification Opportunities for Check Point and Mitsubishi UFJ

0.85

Correlation Coefficient

Check Point  Mitsubishi UFJ

Very poor diversification

The 3 months correlation between Check and Mitsubishi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial and Check Point 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 Check Point Software 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 Financial has no effect on the direction of Check Point i.e., Check Point and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Check Point and Mitsubishi UFJ

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.95 times more return on investment than Mitsubishi UFJ. However, Check Point Software is 1.05 times less risky than Mitsubishi UFJ. It trades about 0.2 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.18 per unit of risk. If you would invest  45,135  in Check Point Software on October 24, 2024 and sell it today you would earn a total of  13,139  from holding Check Point Software or generate 29.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Check Point Software  vs.  Mitsubishi UFJ Financial

Check Point Software

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Check Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi UFJ Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mitsubishi UFJ sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and Mitsubishi UFJ

The main advantage of trading using opposite Check Point and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point 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 Check Point Software and Mitsubishi UFJ Financial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.