Correlation Between ITOCHU and Mitsui Co
Can any of the company-specific risk be diversified away by investing in both ITOCHU and Mitsui Co 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 Mitsui Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITOCHU and Mitsui Co, you can compare the effects of market volatilities on ITOCHU and Mitsui Co 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 Mitsui Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITOCHU and Mitsui Co.
Diversification Opportunities for ITOCHU and Mitsui Co
Weak diversification
The 3 months correlation between ITOCHU and Mitsui is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ITOCHU and Mitsui Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Co 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 Mitsui Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Co has no effect on the direction of ITOCHU i.e., ITOCHU and Mitsui Co go up and down completely randomly.
Pair Corralation between ITOCHU and Mitsui Co
Assuming the 90 days horizon ITOCHU is expected to generate 1.2 times more return on investment than Mitsui Co. However, ITOCHU is 1.2 times more volatile than Mitsui Co. It trades about 0.02 of its potential returns per unit of risk. Mitsui Co is currently generating about 0.0 per unit of risk. If you would invest 4,863 in ITOCHU on August 29, 2024 and sell it today you would lose (37.00) from holding ITOCHU or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITOCHU vs. Mitsui Co
Performance |
| Timeline |
| ITOCHU |
| Mitsui Co |
ITOCHU and Mitsui Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITOCHU and Mitsui Co
The main advantage of trading using opposite ITOCHU and Mitsui Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITOCHU position performs unexpectedly, Mitsui Co 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 Mitsui Co will offset losses from the drop in Mitsui Co's long position.| ITOCHU vs. Sumitomo Corp ADR | ITOCHU vs. Mitsui Co | ITOCHU vs. Marubeni Corp ADR | ITOCHU vs. Mitsubishi Corp |
| Mitsui Co vs. Honeywell International | Mitsui Co vs. 3M Company | Mitsui Co vs. Mitsubishi Corp | Mitsui Co vs. Hitachi |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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