Correlation Between Mitsubishi UFJ and ING Group

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

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

Diversification Opportunities for Mitsubishi UFJ and ING Group

0.84

Correlation Coefficient

Mitsubishi UFJ  ING Group

Very poor diversification

The 3 months correlation between Mitsubishi and ING is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and ING Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Group NV 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 Financial are associated (or correlated) with ING Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Group NV has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and ING Group go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and ING Group

Given the investment horizon of 90 days Mitsubishi UFJ is expected to generate 1.38 times less return on investment than ING Group. In addition to that, Mitsubishi UFJ is 1.09 times more volatile than ING Group NV. It trades about 0.17 of its total potential returns per unit of risk. ING Group NV is currently generating about 0.25 per unit of volatility. If you would invest  1,549  in ING Group NV on December 28, 2024 and sell it today you would earn a total of  432.00  from holding ING Group NV or generate 27.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Mitsubishi UFJ Financial  vs.  ING Group NV

Mitsubishi UFJ Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Mitsubishi UFJ reported solid returns over the last few months and may actually be approaching a breakup point.

ING Group NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ING Group NV are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ING Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsubishi UFJ and ING Group

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

The idea behind Mitsubishi UFJ Financial and ING Group NV 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.