Correlation Between Mitsubishi UFJ and Dana

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

Diversification Opportunities for Mitsubishi UFJ and Dana

0.06

Correlation Coefficient

Mitsubishi UFJ  Dana

Significant diversification

The 3 months correlation between Mitsubishi and Dana is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Lease and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc 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 Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Dana go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and Dana

Assuming the 90 days horizon Mitsubishi UFJ is expected to generate 9.77 times less return on investment than Dana. In addition to that, Mitsubishi UFJ is 1.15 times more volatile than Dana Inc. It trades about 0.01 of its total potential returns per unit of risk. Dana Inc is currently generating about 0.16 per unit of volatility. If you would invest  1,125  in Dana Inc on December 2, 2024 and sell it today you would earn a total of  362.00  from holding Dana Inc or generate 32.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.05%
Values	Daily Returns

Mitsubishi UFJ Lease  vs.  Dana Inc

Mitsubishi UFJ Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Lease are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mitsubishi UFJ is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Dana Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsubishi UFJ and Dana

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

The idea behind Mitsubishi UFJ Lease and Dana Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .