Correlation Between Mitsubishi UFJ and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and Cheesecake Factory 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 Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi UFJ Lease and The Cheesecake Factory, you can compare the effects of market volatilities on Mitsubishi UFJ and Cheesecake Factory 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 Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and Cheesecake Factory.
Diversification Opportunities for Mitsubishi UFJ and Cheesecake Factory
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitsubishi and Cheesecake is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Lease and The Cheesecake Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Cheesecake Factory 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 Lease are associated (or correlated) with Cheesecake Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Cheesecake Factory has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Mitsubishi UFJ and Cheesecake Factory
Assuming the 90 days horizon Mitsubishi UFJ Lease is expected to generate 2.2 times more return on investment than Cheesecake Factory. However, Mitsubishi UFJ is 2.2 times more volatile than The Cheesecake Factory. It trades about 0.04 of its potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.05 per unit of risk. If you would invest 848.00 in Mitsubishi UFJ Lease on August 26, 2024 and sell it today you would earn a total of 362.00 from holding Mitsubishi UFJ Lease or generate 42.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 65.59% |
| Values | Daily Returns |
Mitsubishi UFJ Lease vs. The Cheesecake Factory
Performance |
| Timeline |
| Mitsubishi UFJ Lease |
| The Cheesecake Factory |
Mitsubishi UFJ and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi UFJ and Cheesecake Factory
The main advantage of trading using opposite Mitsubishi UFJ and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ position performs unexpectedly, Cheesecake Factory 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 Cheesecake Factory will offset losses from the drop in Cheesecake Factory's long position.| Mitsubishi UFJ vs. Visa Class A | Mitsubishi UFJ vs. Mastercard | Mitsubishi UFJ vs. American Express | Mitsubishi UFJ vs. PayPal Holdings |
| Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory vs. Brinker International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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