Correlation Between Mitsubishi UFJ and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and QBE Insurance 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 QBE Insurance 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 QBE Insurance Group, you can compare the effects of market volatilities on Mitsubishi UFJ and QBE Insurance 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 QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and QBE Insurance.
Diversification Opportunities for Mitsubishi UFJ and QBE Insurance
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mitsubishi and QBE is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group 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 QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and QBE Insurance go up and down completely randomly.
Pair Corralation between Mitsubishi UFJ and QBE Insurance
Assuming the 90 days horizon Mitsubishi UFJ is expected to generate 1.37 times less return on investment than QBE Insurance. In addition to that, Mitsubishi UFJ is 1.35 times more volatile than QBE Insurance Group. It trades about 0.07 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about 0.12 per unit of volatility. If you would invest 1,148 in QBE Insurance Group on August 28, 2024 and sell it today you would earn a total of 106.00 from holding QBE Insurance Group or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi UFJ Financial vs. QBE Insurance Group
Performance |
| Timeline |
| Mitsubishi UFJ Financial |
| QBE Insurance Group |
Mitsubishi UFJ and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi UFJ and QBE Insurance
The main advantage of trading using opposite Mitsubishi UFJ and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ position performs unexpectedly, QBE Insurance 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 QBE Insurance will offset losses from the drop in QBE Insurance's long position.| Mitsubishi UFJ vs. ANZ Group Holdings | Mitsubishi UFJ vs. Agricultural Bank | Mitsubishi UFJ vs. Industrial and Commercial | Mitsubishi UFJ vs. Bank of America |
| QBE Insurance vs. Progressive Corp | QBE Insurance vs. White Mountains Insurance | QBE Insurance vs. Chubb | QBE Insurance vs. W R Berkley |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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