Correlation Between ITOCHU and Mytilineos Holdings
Can any of the company-specific risk be diversified away by investing in both ITOCHU and Mytilineos Holdings 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 Mytilineos Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITOCHU and Mytilineos Holdings SA, you can compare the effects of market volatilities on ITOCHU and Mytilineos Holdings 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 Mytilineos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITOCHU and Mytilineos Holdings.
Diversification Opportunities for ITOCHU and Mytilineos Holdings
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ITOCHU and Mytilineos is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ITOCHU and Mytilineos Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mytilineos Holdings 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 Mytilineos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mytilineos Holdings has no effect on the direction of ITOCHU i.e., ITOCHU and Mytilineos Holdings go up and down completely randomly.
Pair Corralation between ITOCHU and Mytilineos Holdings
Assuming the 90 days horizon ITOCHU is expected to generate 2.55 times more return on investment than Mytilineos Holdings. However, ITOCHU is 2.55 times more volatile than Mytilineos Holdings SA. It trades about 0.08 of its potential returns per unit of risk. Mytilineos Holdings SA is currently generating about -0.09 per unit of risk. If you would invest 4,829 in ITOCHU on August 25, 2024 and sell it today you would earn a total of 317.00 from holding ITOCHU or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITOCHU vs. Mytilineos Holdings SA
Performance |
| Timeline |
| ITOCHU |
| Mytilineos Holdings |
ITOCHU and Mytilineos Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITOCHU and Mytilineos Holdings
The main advantage of trading using opposite ITOCHU and Mytilineos Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITOCHU position performs unexpectedly, Mytilineos Holdings 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 Mytilineos Holdings will offset losses from the drop in Mytilineos Holdings' long position.| ITOCHU vs. Sumitomo Corp ADR | ITOCHU vs. Mitsui Co | ITOCHU vs. Marubeni Corp ADR | ITOCHU vs. Mitsubishi Corp |
| Mytilineos Holdings vs. Honeywell International | Mytilineos Holdings vs. MDU Resources Group | Mytilineos Holdings vs. Compass Diversified Holdings | Mytilineos Holdings vs. Valmont Industries |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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