Correlation Between Custom Truck and Mitsubishi UFJ

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

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

Diversification Opportunities for Custom Truck and Mitsubishi UFJ

-0.23

Correlation Coefficient

Custom Truck  Mitsubishi UFJ

Very good diversification

The 3 months correlation between Custom and Mitsubishi is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One 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 Custom Truck 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 Custom Truck One 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 Custom Truck i.e., Custom Truck and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Custom Truck and Mitsubishi UFJ

Given the investment horizon of 90 days Custom Truck is expected to generate 3.39 times less return on investment than Mitsubishi UFJ. In addition to that, Custom Truck is 1.13 times more volatile than Mitsubishi UFJ Lease. It trades about 0.02 of its total potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about 0.09 per unit of volatility. If you would invest  1,286  in Mitsubishi UFJ Lease on December 22, 2024 and sell it today you would earn a total of  170.00  from holding Mitsubishi UFJ Lease or generate 13.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

Custom Truck One  vs.  Mitsubishi UFJ Lease

Custom Truck One

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Custom Truck is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Mitsubishi UFJ Lease

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain 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 Custom Truck and Mitsubishi UFJ

The main advantage of trading using opposite Custom Truck and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck 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 Custom Truck One 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.