Correlation Between Mitsubishi UFJ and 02005NBF6

Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and 02005NBF6 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 02005NBF6 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 Ally Financial 575, you can compare the effects of market volatilities on Mitsubishi UFJ and 02005NBF6 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 02005NBF6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and 02005NBF6.

Diversification Opportunities for Mitsubishi UFJ and 02005NBF6

-0.08

Correlation Coefficient

Mitsubishi UFJ  02005NBF6

Good diversification

The 3 months correlation between Mitsubishi and 02005NBF6 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Lease and Ally Financial 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial 575 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 02005NBF6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial 575 has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and 02005NBF6 go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and 02005NBF6

Assuming the 90 days horizon Mitsubishi UFJ Lease is expected to generate 10.37 times more return on investment than 02005NBF6. However, Mitsubishi UFJ is 10.37 times more volatile than Ally Financial 575. It trades about 0.05 of its potential returns per unit of risk. Ally Financial 575 is currently generating about -0.02 per unit of risk. If you would invest  1,323  in Mitsubishi UFJ Lease on December 27, 2024 and sell it today you would earn a total of  72.00  from holding Mitsubishi UFJ Lease or generate 5.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.48%
Values	Daily Returns

Mitsubishi UFJ Lease  vs.  Ally Financial 575

Mitsubishi UFJ Lease

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Lease are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Mitsubishi UFJ may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ally Financial 575

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ally Financial 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 02005NBF6 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 UFJ and 02005NBF6

The main advantage of trading using opposite Mitsubishi UFJ and 02005NBF6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ position performs unexpectedly, 02005NBF6 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 02005NBF6 will offset losses from the drop in 02005NBF6's long position.

The idea behind Mitsubishi UFJ Lease and Ally Financial 575 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.