Correlation Between Mitsubishi UFJ and Bank of America Corp
Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and Bank of America Corp 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 Bank of America Corp 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 Bank of America, you can compare the effects of market volatilities on Mitsubishi UFJ and Bank of America Corp 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 Bank of America Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and Bank of America Corp.
Diversification Opportunities for Mitsubishi UFJ and Bank of America Corp
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mitsubishi and Bank is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America Corp 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 Bank of America Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America Corp has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Bank of America Corp go up and down completely randomly.
Pair Corralation between Mitsubishi UFJ and Bank of America Corp
Assuming the 90 days horizon Mitsubishi UFJ Financial is expected to generate 1.08 times more return on investment than Bank of America Corp. However, Mitsubishi UFJ is 1.08 times more volatile than Bank of America. It trades about 0.33 of its potential returns per unit of risk. Bank of America is currently generating about 0.29 per unit of risk. If you would invest 930.00 in Mitsubishi UFJ Financial on August 28, 2024 and sell it today you would earn a total of 175.00 from holding Mitsubishi UFJ Financial or generate 18.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi UFJ Financial vs. Bank of America
Performance |
| Timeline |
| Mitsubishi UFJ Financial |
| Bank of America Corp |
Mitsubishi UFJ and Bank of America Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi UFJ and Bank of America Corp
The main advantage of trading using opposite Mitsubishi UFJ and Bank of America Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ position performs unexpectedly, Bank of America Corp 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 Bank of America Corp will offset losses from the drop in Bank of America Corp's long position.| Mitsubishi UFJ vs. TreeHouse Foods | Mitsubishi UFJ vs. Astral Foods Limited | Mitsubishi UFJ vs. Dairy Farm International | Mitsubishi UFJ vs. SENECA FOODS A |
| Bank of America Corp vs. Singapore Reinsurance | Bank of America Corp vs. Goosehead Insurance | Bank of America Corp vs. HANOVER INSURANCE | Bank of America Corp vs. QBE Insurance Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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