Correlation Between Mitsubishi Electric and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Electric and Johnson Johnson 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 Electric and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Electric and Johnson Johnson, you can compare the effects of market volatilities on Mitsubishi Electric and Johnson Johnson 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 Electric with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Electric and Johnson Johnson.
Diversification Opportunities for Mitsubishi Electric and Johnson Johnson
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mitsubishi and Johnson is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Electric and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Mitsubishi Electric 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 Electric are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of Mitsubishi Electric i.e., Mitsubishi Electric and Johnson Johnson go up and down completely randomly.
Pair Corralation between Mitsubishi Electric and Johnson Johnson
Assuming the 90 days trading horizon Mitsubishi Electric is expected to under-perform the Johnson Johnson. In addition to that, Mitsubishi Electric is 2.19 times more volatile than Johnson Johnson. It trades about -0.18 of its total potential returns per unit of risk. Johnson Johnson is currently generating about 0.61 per unit of volatility. If you would invest 14,288 in Johnson Johnson on November 28, 2024 and sell it today you would earn a total of 1,500 from holding Johnson Johnson or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Electric vs. Johnson Johnson
Performance |
| Timeline |
| Mitsubishi Electric |
| Johnson Johnson |
Mitsubishi Electric and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Electric and Johnson Johnson
The main advantage of trading using opposite Mitsubishi Electric and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Electric position performs unexpectedly, Johnson Johnson 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 Johnson Johnson will offset losses from the drop in Johnson Johnson's long position.| Mitsubishi Electric vs. Austevoll Seafood ASA | Mitsubishi Electric vs. SENECA FOODS A | Mitsubishi Electric vs. GWILLI FOOD | Mitsubishi Electric vs. Casio Computer CoLtd |
| Johnson Johnson vs. Uber Technologies | Johnson Johnson vs. GALENA MINING LTD | Johnson Johnson vs. Playtech plc | Johnson Johnson vs. ASPEN TECHINC DL |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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