Correlation Between Mitsui Co and Marubeni Corp
Can any of the company-specific risk be diversified away by investing in both Mitsui Co and Marubeni 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 Mitsui Co and Marubeni Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Co and Marubeni Corp ADR, you can compare the effects of market volatilities on Mitsui Co and Marubeni 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 Mitsui Co with a short position of Marubeni Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Co and Marubeni Corp.
Diversification Opportunities for Mitsui Co and Marubeni Corp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mitsui and Marubeni is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Co and Marubeni Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni Corp ADR and Mitsui Co 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 Mitsui Co are associated (or correlated) with Marubeni Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni Corp ADR has no effect on the direction of Mitsui Co i.e., Mitsui Co and Marubeni Corp go up and down completely randomly.
Pair Corralation between Mitsui Co and Marubeni Corp
Assuming the 90 days horizon Mitsui Co is expected to generate 2.1 times more return on investment than Marubeni Corp. However, Mitsui Co is 2.1 times more volatile than Marubeni Corp ADR. It trades about 0.0 of its potential returns per unit of risk. Marubeni Corp ADR is currently generating about -0.06 per unit of risk. If you would invest 2,028 in Mitsui Co on August 29, 2024 and sell it today you would lose (78.00) from holding Mitsui Co or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Mitsui Co vs. Marubeni Corp ADR
Performance |
| Timeline |
| Mitsui Co |
| Marubeni Corp ADR |
Mitsui Co and Marubeni Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Co and Marubeni Corp
The main advantage of trading using opposite Mitsui Co and Marubeni Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Co position performs unexpectedly, Marubeni 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 Marubeni Corp will offset losses from the drop in Marubeni Corp's long position.| Mitsui Co vs. Honeywell International | Mitsui Co vs. 3M Company | Mitsui Co vs. Mitsubishi Corp | Mitsui Co vs. Hitachi |
| Marubeni Corp vs. Mitsubishi Corp | Marubeni Corp vs. Itochu Corp ADR | Marubeni Corp vs. Marubeni | Marubeni Corp vs. Sumitomo Corp ADR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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