Correlation Between Mitsubishi UFJ and Hertz Global

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

Diversification Opportunities for Mitsubishi UFJ and Hertz Global

-0.22

Correlation Coefficient

Mitsubishi UFJ  Hertz Global

Very good diversification

The 3 months correlation between Mitsubishi and Hertz is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Lease and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs 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 Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Hldgs has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Hertz Global go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and Hertz Global

Assuming the 90 days horizon Mitsubishi UFJ Lease is expected to generate 0.81 times more return on investment than Hertz Global. However, Mitsubishi UFJ Lease is 1.23 times less risky than Hertz Global. It trades about 0.09 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about 0.03 per unit of risk. If you would invest  1,286  in Mitsubishi UFJ Lease on December 22, 2024 and sell it today you would earn a total of  170.00  from holding Mitsubishi UFJ Lease or generate 13.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

Mitsubishi UFJ Lease  vs.  Hertz Global Hldgs

Mitsubishi UFJ Lease

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Mitsubishi UFJ showed solid returns over the last few months and may actually be approaching a breakup point.

Hertz Global Hldgs

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hertz Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mitsubishi UFJ and Hertz Global

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

The idea behind Mitsubishi UFJ Lease and Hertz Global Hldgs 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.