Correlation Between Merck and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both Merck and Mitsubishi UFJ 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 Merck and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on Merck and Mitsubishi UFJ 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 Merck with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Mitsubishi UFJ.
Diversification Opportunities for Merck and Mitsubishi UFJ
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Mitsubishi is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial and Merck 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 Merck Company are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of Merck i.e., Merck and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between Merck and Mitsubishi UFJ
Considering the 90-day investment horizon Merck is expected to generate 183.1 times less return on investment than Mitsubishi UFJ. But when comparing it to its historical volatility, Merck Company is 1.6 times less risky than Mitsubishi UFJ. It trades about 0.0 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 531.00 in Mitsubishi UFJ Financial on September 3, 2024 and sell it today you would earn a total of 660.00 from holding Mitsubishi UFJ Financial or generate 124.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Mitsubishi UFJ Financial
Performance |
| Timeline |
| Merck Company |
| Mitsubishi UFJ Financial |
Merck and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Mitsubishi UFJ
The main advantage of trading using opposite Merck and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Mitsubishi UFJ 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 Mitsubishi UFJ will offset losses from the drop in Mitsubishi UFJ's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Mitsubishi UFJ vs. Partner Communications | Mitsubishi UFJ vs. Merck Company | Mitsubishi UFJ vs. Western Midstream Partners | Mitsubishi UFJ vs. Edgewise Therapeutics |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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