Correlation Between Mitsubishi UFJ and Safety Shot

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

Diversification Opportunities for Mitsubishi UFJ and Safety Shot

0.66

Correlation Coefficient

Mitsubishi UFJ  Safety Shot

Poor diversification

The 3 months correlation between Mitsubishi and Safety is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Lease and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Safety Shot go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and Safety Shot

Assuming the 90 days horizon Mitsubishi UFJ Lease is expected to generate 1.07 times more return on investment than Safety Shot. However, Mitsubishi UFJ is 1.07 times more volatile than Safety Shot. It trades about 0.02 of its potential returns per unit of risk. Safety Shot is currently generating about -0.14 per unit of risk. If you would invest  1,250  in Mitsubishi UFJ Lease on October 7, 2024 and sell it today you would lose (15.00) from holding Mitsubishi UFJ Lease or give up 1.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.35%
Values	Daily Returns

Mitsubishi UFJ Lease  vs.  Safety Shot

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.

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mitsubishi UFJ and Safety Shot

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

The idea behind Mitsubishi UFJ Lease and Safety Shot 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.