Correlation Between Energizer Holdings and Mitsubishi Electric

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

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

Diversification Opportunities for Energizer Holdings and Mitsubishi Electric

-0.29

Correlation Coefficient

Energizer Holdings  Mitsubishi Electric

Very good diversification

The 3 months correlation between Energizer and Mitsubishi is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Energizer Holdings and Mitsubishi Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric and Energizer Holdings 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 Energizer Holdings are associated (or correlated) with Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric has no effect on the direction of Energizer Holdings i.e., Energizer Holdings and Mitsubishi Electric go up and down completely randomly.

Pair Corralation between Energizer Holdings and Mitsubishi Electric

Considering the 90-day investment horizon Energizer Holdings is expected to under-perform the Mitsubishi Electric. But the stock apears to be less risky and, when comparing its historical volatility, Energizer Holdings is 2.61 times less risky than Mitsubishi Electric. The stock trades about -0.18 of its potential returns per unit of risk. The Mitsubishi Electric is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,646  in Mitsubishi Electric on December 31, 2024 and sell it today you would earn a total of  354.00  from holding Mitsubishi Electric or generate 21.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Energizer Holdings  vs.  Mitsubishi Electric

Energizer Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energizer Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Mitsubishi Electric

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Electric are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Mitsubishi Electric reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energizer Holdings and Mitsubishi Electric

The main advantage of trading using opposite Energizer Holdings and Mitsubishi Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energizer Holdings position performs unexpectedly, Mitsubishi Electric 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 Electric will offset losses from the drop in Mitsubishi Electric's long position.

The idea behind Energizer Holdings and Mitsubishi Electric 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.