Correlation Between Metalurgica Gerdau and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau 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 Metalurgica Gerdau and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metalurgica Gerdau SA and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on Metalurgica Gerdau 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 Metalurgica Gerdau with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Mitsubishi UFJ.
Diversification Opportunities for Metalurgica Gerdau and Mitsubishi UFJ
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metalurgica and Mitsubishi is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA 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 Metalurgica Gerdau 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 Metalurgica Gerdau SA 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 Metalurgica Gerdau i.e., Metalurgica Gerdau and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Mitsubishi UFJ
Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 1.01 times less return on investment than Mitsubishi UFJ. In addition to that, Metalurgica Gerdau is 1.07 times more volatile than Mitsubishi UFJ Financial. It trades about 0.02 of its total potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.02 per unit of volatility. If you would invest 7,266 in Mitsubishi UFJ Financial on November 18, 2024 and sell it today you would earn a total of 35.00 from holding Mitsubishi UFJ Financial or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Mitsubishi UFJ Financial
Performance |
| Timeline |
| Metalurgica Gerdau |
| Mitsubishi UFJ Financial |
Metalurgica Gerdau and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Mitsubishi UFJ
The main advantage of trading using opposite Metalurgica Gerdau and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau 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.| Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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