Correlation Between Adecco and Mitsubishi Electric
Can any of the company-specific risk be diversified away by investing in both Adecco and Mitsubishi Electric 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 Adecco and Mitsubishi Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adecco Group and Mitsubishi Electric Corp, you can compare the effects of market volatilities on Adecco and Mitsubishi Electric 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 Adecco with a short position of Mitsubishi Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adecco and Mitsubishi Electric.
Diversification Opportunities for Adecco and Mitsubishi Electric
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adecco and Mitsubishi is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Adecco Group and Mitsubishi Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric Corp and Adecco 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 Adecco Group are associated (or correlated) with Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric Corp has no effect on the direction of Adecco i.e., Adecco and Mitsubishi Electric go up and down completely randomly.
Pair Corralation between Adecco and Mitsubishi Electric
Assuming the 90 days horizon Adecco Group is expected to generate 1.06 times more return on investment than Mitsubishi Electric. However, Adecco is 1.06 times more volatile than Mitsubishi Electric Corp. It trades about -0.01 of its potential returns per unit of risk. Mitsubishi Electric Corp is currently generating about -0.11 per unit of risk. If you would invest 1,210 in Adecco Group on November 9, 2024 and sell it today you would lose (11.00) from holding Adecco Group or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adecco Group vs. Mitsubishi Electric Corp
Performance |
| Timeline |
| Adecco Group |
| Mitsubishi Electric Corp |
Adecco and Mitsubishi Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adecco and Mitsubishi Electric
The main advantage of trading using opposite Adecco and Mitsubishi Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adecco position performs unexpectedly, Mitsubishi Electric 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 Electric will offset losses from the drop in Mitsubishi Electric's long position.| Adecco vs. ManpowerGroup | Adecco vs. Robert Half International | Adecco vs. Hire Technologies | Adecco vs. The Caldwell Partners |
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Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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