Correlation Between Mitsubishi UFJ and Custom Truck

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

By analyzing existing cross correlation between Mitsubishi UFJ Lease and Custom Truck One, you can compare the effects of market volatilities on Mitsubishi UFJ and Custom Truck 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 Custom Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and Custom Truck.

Diversification Opportunities for Mitsubishi UFJ and Custom Truck

-0.63

Correlation Coefficient

Mitsubishi UFJ  Custom Truck

Excellent diversification

The 3 months correlation between Mitsubishi and Custom is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Lease and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One 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 Lease are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Custom Truck go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and Custom Truck

Assuming the 90 days horizon Mitsubishi UFJ Lease is expected to generate 0.84 times more return on investment than Custom Truck. However, Mitsubishi UFJ Lease is 1.18 times less risky than Custom Truck. It trades about -0.18 of its potential returns per unit of risk. Custom Truck One is currently generating about -0.36 per unit of risk. 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	Weak
Accuracy	95.24%
Values	Daily Returns

Mitsubishi UFJ Lease  vs.  Custom Truck One

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.

Custom Truck One

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Mitsubishi UFJ and Custom Truck

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

The idea behind Mitsubishi UFJ Lease and Custom Truck One 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.