Correlation Between Mitsubishi UFJ and PERRIGO

Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and PERRIGO 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 PERRIGO 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 PERRIGO, you can compare the effects of market volatilities on Mitsubishi UFJ and PERRIGO 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 PERRIGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and PERRIGO.

Diversification Opportunities for Mitsubishi UFJ and PERRIGO

-0.8

Correlation Coefficient

Mitsubishi UFJ  PERRIGO

Pay attention - limited upside

The 3 months correlation between Mitsubishi and PERRIGO is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and PERRIGO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PERRIGO 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 PERRIGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PERRIGO has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and PERRIGO go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and PERRIGO

Assuming the 90 days trading horizon Mitsubishi UFJ Financial is expected to generate 0.26 times more return on investment than PERRIGO. However, Mitsubishi UFJ Financial is 3.89 times less risky than PERRIGO. It trades about 0.19 of its potential returns per unit of risk. PERRIGO is currently generating about 0.0 per unit of risk. If you would invest  900.00  in Mitsubishi UFJ Financial on September 30, 2024 and sell it today you would earn a total of  200.00  from holding Mitsubishi UFJ Financial or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Mitsubishi UFJ Financial  vs.  PERRIGO

Mitsubishi UFJ Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mitsubishi UFJ unveiled solid returns over the last few months and may actually be approaching a breakup point.

PERRIGO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PERRIGO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PERRIGO is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsubishi UFJ and PERRIGO

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

The idea behind Mitsubishi UFJ Financial and PERRIGO 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.