Correlation Between Mitsubishi UFJ and American Airlines
Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and American Airlines 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 Mitsubishi UFJ and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi UFJ Financial and American Airlines Group, you can compare the effects of market volatilities on Mitsubishi UFJ and American Airlines 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 Mitsubishi UFJ with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and American Airlines.
Diversification Opportunities for Mitsubishi UFJ and American Airlines
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mitsubishi and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Mitsubishi UFJ 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 Mitsubishi UFJ Financial are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and American Airlines go up and down completely randomly.
Pair Corralation between Mitsubishi UFJ and American Airlines
Assuming the 90 days trading horizon Mitsubishi UFJ Financial is expected to generate 1.06 times more return on investment than American Airlines. However, Mitsubishi UFJ is 1.06 times more volatile than American Airlines Group. It trades about 0.37 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.26 per unit of risk. If you would invest 5,886 in Mitsubishi UFJ Financial on August 28, 2024 and sell it today you would earn a total of 1,002 from holding Mitsubishi UFJ Financial or generate 17.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi UFJ Financial vs. American Airlines Group
Performance |
| Timeline |
| Mitsubishi UFJ Financial |
| American Airlines |
Mitsubishi UFJ and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi UFJ and American Airlines
The main advantage of trading using opposite Mitsubishi UFJ and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Mitsubishi UFJ vs. Fras le SA | Mitsubishi UFJ vs. Clave Indices De | Mitsubishi UFJ vs. BTG Pactual Logstica | Mitsubishi UFJ vs. Telefonaktiebolaget LM Ericsson |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |