Correlation Between Capital One and Mitsubishi UFJ

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

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

Diversification Opportunities for Capital One and Mitsubishi UFJ

-0.49

Correlation Coefficient

Capital One  Mitsubishi UFJ

Very good diversification

The 3 months correlation between Capital and Mitsubishi is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial 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 Capital One 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 Capital One Financial 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 Capital One i.e., Capital One and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Capital One and Mitsubishi UFJ

Considering the 90-day investment horizon Capital One Financial is expected to under-perform the Mitsubishi UFJ. But the stock apears to be less risky and, when comparing its historical volatility, Capital One Financial is 1.51 times less risky than Mitsubishi UFJ. The stock trades about -0.01 of its potential returns per unit of risk. The 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 30, 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	Very Weak
Accuracy	88.71%
Values	Daily Returns

Capital One Financial  vs.  Mitsubishi UFJ Lease

Capital One Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital One Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Capital One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 weak 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 Capital One and Mitsubishi UFJ

The main advantage of trading using opposite Capital One and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One 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 Capital One Financial 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.