Correlation Between DFS Furniture and Mitsubishi Materials
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Mitsubishi Materials 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 DFS Furniture and Mitsubishi Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Mitsubishi Materials, you can compare the effects of market volatilities on DFS Furniture and Mitsubishi Materials 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 DFS Furniture with a short position of Mitsubishi Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Mitsubishi Materials.
Diversification Opportunities for DFS Furniture and Mitsubishi Materials
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between DFS and Mitsubishi is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Mitsubishi Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Materials and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Mitsubishi Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Materials has no effect on the direction of DFS Furniture i.e., DFS Furniture and Mitsubishi Materials go up and down completely randomly.
Pair Corralation between DFS Furniture and Mitsubishi Materials
Assuming the 90 days trading horizon DFS Furniture PLC is expected to under-perform the Mitsubishi Materials. In addition to that, DFS Furniture is 1.92 times more volatile than Mitsubishi Materials. It trades about -0.08 of its total potential returns per unit of risk. Mitsubishi Materials is currently generating about 0.1 per unit of volatility. If you would invest 1,412 in Mitsubishi Materials on December 30, 2024 and sell it today you would earn a total of 128.00 from holding Mitsubishi Materials or generate 9.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
DFS Furniture PLC vs. Mitsubishi Materials
Performance |
Timeline |
DFS Furniture PLC |
Mitsubishi Materials |
DFS Furniture and Mitsubishi Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DFS Furniture and Mitsubishi Materials
The main advantage of trading using opposite DFS Furniture and Mitsubishi Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Mitsubishi Materials 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 Materials will offset losses from the drop in Mitsubishi Materials' long position.DFS Furniture vs. CSSC Offshore Marine | DFS Furniture vs. Shenandoah Telecommunications | DFS Furniture vs. ORMAT TECHNOLOGIES | DFS Furniture vs. FORTRESS BIOTECHPRFA 25 |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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