Correlation Between Barclays PLC and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both Barclays PLC 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 Barclays PLC and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays PLC and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on Barclays PLC 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 Barclays PLC with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and Mitsubishi UFJ.
Diversification Opportunities for Barclays PLC and Mitsubishi UFJ
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barclays and Mitsubishi is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC 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 Barclays PLC 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 Barclays PLC 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 Barclays PLC i.e., Barclays PLC and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between Barclays PLC and Mitsubishi UFJ
Assuming the 90 days horizon Barclays PLC is expected to generate 1.6 times more return on investment than Mitsubishi UFJ. However, Barclays PLC is 1.6 times more volatile than Mitsubishi UFJ Financial. It trades about 0.07 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.07 per unit of risk. If you would invest 301.00 in Barclays PLC on August 31, 2024 and sell it today you would earn a total of 32.00 from holding Barclays PLC or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays PLC vs. Mitsubishi UFJ Financial
Performance |
| Timeline |
| Barclays PLC |
| Mitsubishi UFJ Financial |
Barclays PLC and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays PLC and Mitsubishi UFJ
The main advantage of trading using opposite Barclays PLC and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC 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.| Barclays PLC vs. ABN AMRO Bank | Barclays PLC vs. Bank of America | Barclays PLC vs. Bank of America | Barclays PLC vs. Banco Bilbao Vizcaya |
| Mitsubishi UFJ vs. Sumitomo Mitsui Financial | Mitsubishi UFJ vs. Mizuho Financial Group | Mitsubishi UFJ vs. Nomura Holdings ADR | Mitsubishi UFJ vs. Natwest Group PLC |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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