Correlation Between Jefferies Financial and Mitsubishi UFJ

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

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

Diversification Opportunities for Jefferies Financial and Mitsubishi UFJ

-0.68

Correlation Coefficient

Jefferies Financial  Mitsubishi UFJ

Excellent diversification

The 3 months correlation between Jefferies and Mitsubishi is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Jefferies Financial Group and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial and Jefferies Financial 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 Jefferies Financial Group 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 Financial has no effect on the direction of Jefferies Financial i.e., Jefferies Financial and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Jefferies Financial and Mitsubishi UFJ

Assuming the 90 days trading horizon Jefferies Financial Group is expected to under-perform the Mitsubishi UFJ. In addition to that, Jefferies Financial is 1.1 times more volatile than Mitsubishi UFJ Financial. It trades about -0.21 of its total potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.11 per unit of volatility. If you would invest  7,238  in Mitsubishi UFJ Financial on December 27, 2024 and sell it today you would earn a total of  1,038  from holding Mitsubishi UFJ Financial or generate 14.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Jefferies Financial Group  vs.  Mitsubishi UFJ Financial

Jefferies Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jefferies Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Mitsubishi UFJ Financial

Risk-Adjusted Performance

OK

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

Pair Trading with Jefferies Financial and Mitsubishi UFJ

The main advantage of trading using opposite Jefferies Financial and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jefferies Financial 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 Jefferies Financial Group and Mitsubishi UFJ Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.