Correlation Between Mitsubishi Gas and Allstate

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

By analyzing existing cross correlation between Mitsubishi Gas Chemical and The Allstate, you can compare the effects of market volatilities on Mitsubishi Gas and Allstate 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 Gas with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Gas and Allstate.

Diversification Opportunities for Mitsubishi Gas and Allstate

0.62

Correlation Coefficient

Mitsubishi Gas  Allstate

Poor diversification

The 3 months correlation between Mitsubishi and Allstate is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Gas Chemical and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Mitsubishi Gas 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 Gas Chemical are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Mitsubishi Gas i.e., Mitsubishi Gas and Allstate go up and down completely randomly.

Pair Corralation between Mitsubishi Gas and Allstate

Assuming the 90 days trading horizon Mitsubishi Gas is expected to generate 1.88 times less return on investment than Allstate. In addition to that, Mitsubishi Gas is 1.31 times more volatile than The Allstate. It trades about 0.04 of its total potential returns per unit of risk. The Allstate is currently generating about 0.1 per unit of volatility. If you would invest  13,295  in The Allstate on October 7, 2024 and sell it today you would earn a total of  5,425  from holding The Allstate or generate 40.8% return on investment over 90 days.

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

Mitsubishi Gas Chemical  vs.  The Allstate

Mitsubishi Gas Chemical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Gas Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mitsubishi Gas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Allstate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Allstate may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mitsubishi Gas and Allstate

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

The idea behind Mitsubishi Gas Chemical and The Allstate 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.