Correlation Between SBI Insurance and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both SBI Insurance 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 SBI Insurance and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Insurance Group and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on SBI Insurance 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 SBI Insurance with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and Mitsubishi UFJ.
Diversification Opportunities for SBI Insurance and Mitsubishi UFJ
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBI and Mitsubishi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group 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 SBI Insurance 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 SBI Insurance Group 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 SBI Insurance i.e., SBI Insurance and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between SBI Insurance and Mitsubishi UFJ
Assuming the 90 days trading horizon SBI Insurance is expected to generate 10.23 times less return on investment than Mitsubishi UFJ. But when comparing it to its historical volatility, SBI Insurance Group is 1.2 times less risky than Mitsubishi UFJ. It trades about 0.01 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 624.00 in Mitsubishi UFJ Financial on September 14, 2024 and sell it today you would earn a total of 513.00 from holding Mitsubishi UFJ Financial or generate 82.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. Mitsubishi UFJ Financial
Performance |
| Timeline |
| SBI Insurance Group |
| Mitsubishi UFJ Financial |
SBI Insurance and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and Mitsubishi UFJ
The main advantage of trading using opposite SBI Insurance and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance 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.| SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc |
| Mitsubishi UFJ vs. JPMorgan Chase Co | Mitsubishi UFJ vs. Bank of America | Mitsubishi UFJ vs. Wells Fargo | Mitsubishi UFJ vs. HSBC Holdings 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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