Correlation Between Mitsubishi Estate and Global Partners

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

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

Diversification Opportunities for Mitsubishi Estate and Global Partners

-0.79

Correlation Coefficient

Mitsubishi Estate  Global Partners

Pay attention - limited upside

The 3 months correlation between Mitsubishi and Global is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Estate Co and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP and Mitsubishi Estate 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 Estate Co are associated (or correlated) with Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Mitsubishi Estate i.e., Mitsubishi Estate and Global Partners go up and down completely randomly.

Pair Corralation between Mitsubishi Estate and Global Partners

Assuming the 90 days horizon Mitsubishi Estate Co is expected to under-perform the Global Partners. In addition to that, Mitsubishi Estate is 13.27 times more volatile than Global Partners LP. It trades about -0.09 of its total potential returns per unit of risk. Global Partners LP is currently generating about -0.08 per unit of volatility. If you would invest  2,620  in Global Partners LP on October 5, 2024 and sell it today you would lose (5.00) from holding Global Partners LP or give up 0.19% of portfolio value over 90 days.

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

Mitsubishi Estate Co  vs.  Global Partners LP

Mitsubishi Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi Estate Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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.

Global Partners LP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mitsubishi Estate and Global Partners

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

The idea behind Mitsubishi Estate Co and Global Partners LP 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.