Correlation Between Legrand SA and Mitsubishi Electric
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Mitsubishi Electric 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 Legrand SA and Mitsubishi Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legrand SA ADR and Mitsubishi Electric, you can compare the effects of market volatilities on Legrand SA and Mitsubishi Electric 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 Legrand SA with a short position of Mitsubishi Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Mitsubishi Electric.
Diversification Opportunities for Legrand SA and Mitsubishi Electric
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legrand and Mitsubishi is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and Mitsubishi Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric and Legrand SA 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 Legrand SA ADR are associated (or correlated) with Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric has no effect on the direction of Legrand SA i.e., Legrand SA and Mitsubishi Electric go up and down completely randomly.
Pair Corralation between Legrand SA and Mitsubishi Electric
Assuming the 90 days horizon Legrand SA ADR is expected to under-perform the Mitsubishi Electric. But the pink sheet apears to be less risky and, when comparing its historical volatility, Legrand SA ADR is 2.26 times less risky than Mitsubishi Electric. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Mitsubishi Electric is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,800 in Mitsubishi Electric on August 28, 2024 and sell it today you would lose (59.00) from holding Mitsubishi Electric or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Legrand SA ADR vs. Mitsubishi Electric
Performance |
| Timeline |
| Legrand SA ADR |
| Mitsubishi Electric |
Legrand SA and Mitsubishi Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Mitsubishi Electric
The main advantage of trading using opposite Legrand SA and Mitsubishi Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Mitsubishi Electric 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 Electric will offset losses from the drop in Mitsubishi Electric's long position.| Legrand SA vs. FREYR Battery SA | Legrand SA vs. nVent Electric PLC | Legrand SA vs. Hubbell | Legrand SA vs. Advanced Energy Industries |
| Mitsubishi Electric vs. FREYR Battery SA | Mitsubishi Electric vs. nVent Electric PLC | Mitsubishi Electric vs. Hubbell | Mitsubishi Electric vs. Advanced Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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