Correlation Between Hertz Global and Mitsubishi UFJ

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

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

Diversification Opportunities for Hertz Global and Mitsubishi UFJ

-0.31

Correlation Coefficient

Hertz Global  Mitsubishi UFJ

Very good diversification

The 3 months correlation between Hertz and Mitsubishi is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs 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 Hertz Global 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 Hertz Global Hldgs 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 Hertz Global i.e., Hertz Global and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Hertz Global and Mitsubishi UFJ

Assuming the 90 days horizon Hertz Global Hldgs is expected to under-perform the Mitsubishi UFJ. In addition to that, Hertz Global is 1.88 times more volatile than Mitsubishi UFJ Lease. It trades about -0.2 of its total potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about -0.18 per unit of volatility. If you would invest  1,348  in Mitsubishi UFJ Lease on October 10, 2024 and sell it today you would lose (113.00) from holding Mitsubishi UFJ Lease or give up 8.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Hertz Global Hldgs  vs.  Mitsubishi UFJ Lease

Hertz Global Hldgs

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hertz Global showed solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi UFJ Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi UFJ Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hertz Global and Mitsubishi UFJ

The main advantage of trading using opposite Hertz Global and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global 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 Hertz Global Hldgs 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.