Correlation Between ITOCHU and Mitsubishi
Can any of the company-specific risk be diversified away by investing in both ITOCHU and Mitsubishi 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 ITOCHU and Mitsubishi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITOCHU and Mitsubishi, you can compare the effects of market volatilities on ITOCHU and Mitsubishi 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 ITOCHU with a short position of Mitsubishi. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITOCHU and Mitsubishi.
Diversification Opportunities for ITOCHU and Mitsubishi
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between ITOCHU and Mitsubishi is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ITOCHU and Mitsubishi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi and ITOCHU 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 ITOCHU are associated (or correlated) with Mitsubishi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi has no effect on the direction of ITOCHU i.e., ITOCHU and Mitsubishi go up and down completely randomly.
Pair Corralation between ITOCHU and Mitsubishi
Assuming the 90 days horizon ITOCHU is expected to generate 0.75 times more return on investment than Mitsubishi. However, ITOCHU is 1.33 times less risky than Mitsubishi. It trades about 0.06 of its potential returns per unit of risk. Mitsubishi is currently generating about 0.04 per unit of risk. If you would invest 2,883 in ITOCHU on October 13, 2024 and sell it today you would earn a total of 1,643 from holding ITOCHU or generate 56.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITOCHU vs. Mitsubishi
Performance |
| Timeline |
| ITOCHU |
| Mitsubishi |
ITOCHU and Mitsubishi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITOCHU and Mitsubishi
The main advantage of trading using opposite ITOCHU and Mitsubishi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITOCHU position performs unexpectedly, Mitsubishi 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 will offset losses from the drop in Mitsubishi's long position.| ITOCHU vs. CITIC LTD ADR5 | ITOCHU vs. Superior Plus Corp | ITOCHU vs. NMI Holdings | ITOCHU vs. SIVERS SEMICONDUCTORS AB |
| Mitsubishi vs. Astral Foods Limited | Mitsubishi vs. National Beverage Corp | Mitsubishi vs. DETALION GAMES SA | Mitsubishi vs. SENECA FOODS A |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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