Correlation Between Mitsui Chemicals and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Bunzl Plc 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 Chemicals and Bunzl Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Bunzl plc, you can compare the effects of market volatilities on Mitsui Chemicals and Bunzl Plc 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 Chemicals with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Bunzl Plc.
Diversification Opportunities for Mitsui Chemicals and Bunzl Plc
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mitsui and Bunzl is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and Mitsui Chemicals 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 Chemicals are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Bunzl Plc go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Bunzl Plc
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 19.73 times less return on investment than Bunzl Plc. In addition to that, Mitsui Chemicals is 1.12 times more volatile than Bunzl plc. It trades about 0.01 of its total potential returns per unit of risk. Bunzl plc is currently generating about 0.13 per unit of volatility. If you would invest 3,988 in Bunzl plc on November 4, 2024 and sell it today you would earn a total of 118.00 from holding Bunzl plc or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. Bunzl plc
Performance |
| Timeline |
| Mitsui Chemicals |
| Bunzl plc |
Mitsui Chemicals and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Bunzl Plc
The main advantage of trading using opposite Mitsui Chemicals and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Bunzl Plc 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| Mitsui Chemicals vs. SOLSTAD OFFSHORE NK | Mitsui Chemicals vs. NEWELL RUBBERMAID | Mitsui Chemicals vs. WT OFFSHORE | Mitsui Chemicals vs. THRACE PLASTICS |
| Bunzl Plc vs. Xenia Hotels Resorts | Bunzl Plc vs. MELIA HOTELS | Bunzl Plc vs. FORMPIPE SOFTWARE AB | Bunzl Plc vs. PSI Software AG |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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