Correlation Between Mitsubishi UFJ and Sun Communities

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

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

Diversification Opportunities for Mitsubishi UFJ and Sun Communities

-0.03

Correlation Coefficient

Mitsubishi UFJ  Sun Communities

Good diversification

The 3 months correlation between Mitsubishi and Sun is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities and Mitsubishi UFJ 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 Mitsubishi UFJ Financial are associated (or correlated) with Sun Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Communities has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Sun Communities go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and Sun Communities

Assuming the 90 days trading horizon Mitsubishi UFJ Financial is expected to under-perform the Sun Communities. But the stock apears to be less risky and, when comparing its historical volatility, Mitsubishi UFJ Financial is 1.77 times less risky than Sun Communities. The stock trades about -0.09 of its potential returns per unit of risk. The Sun Communities is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,771  in Sun Communities on October 7, 2024 and sell it today you would earn a total of  121.00  from holding Sun Communities or generate 3.21% return on investment over 90 days.

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

Mitsubishi UFJ Financial  vs.  Sun Communities

Mitsubishi UFJ Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 17 (%) 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.

Sun Communities

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Communities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sun Communities sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsubishi UFJ and Sun Communities

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

The idea behind Mitsubishi UFJ Financial and Sun Communities 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.