Correlation Between Visa and Mitsubishi UFJ

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

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

Diversification Opportunities for Visa and Mitsubishi UFJ

0.97

Correlation Coefficient

Visa  Mitsubishi UFJ

Almost no diversification

The 3 months correlation between Visa and Mitsubishi is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial and Visa 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 Visa Inc are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of Visa i.e., Visa and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Visa and Mitsubishi UFJ

Assuming the 90 days trading horizon Visa is expected to generate 1.62 times less return on investment than Mitsubishi UFJ. But when comparing it to its historical volatility, Visa Inc is 1.69 times less risky than Mitsubishi UFJ. It trades about 0.09 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,434  in Mitsubishi UFJ Financial on September 26, 2024 and sell it today you would earn a total of  3,685  from holding Mitsubishi UFJ Financial or generate 107.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	87.87%
Values	Daily Returns

Visa Inc  vs.  Mitsubishi UFJ Financial

Visa Inc

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Visa sustained solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi UFJ Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mitsubishi UFJ sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Mitsubishi UFJ

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

The idea behind Visa Inc and Mitsubishi UFJ Financial 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..