Correlation Between Dana and Mitsubishi UFJ

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

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

Diversification Opportunities for Dana and Mitsubishi UFJ

0.06

Correlation Coefficient

Dana  Mitsubishi UFJ

Significant diversification

The 3 months correlation between Dana and Mitsubishi is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc 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 Dana 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 Dana Inc 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 Dana i.e., Dana and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Dana and Mitsubishi UFJ

Considering the 90-day investment horizon Dana Inc is expected to generate 0.83 times more return on investment than Mitsubishi UFJ. However, Dana Inc is 1.2 times less risky than Mitsubishi UFJ. It trades about 0.23 of its potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about 0.06 per unit of risk. If you would invest  1,119  in Dana Inc on December 2, 2024 and sell it today you would earn a total of  368.00  from holding Dana Inc or generate 32.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.5%
Values	Daily Returns

Dana Inc  vs.  Mitsubishi UFJ Lease

Dana Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana displayed solid returns over the last few months and may actually be approaching a breakup point.

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 Dana and Mitsubishi UFJ

The main advantage of trading using opposite Dana and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana 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 Dana Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.