Correlation Between Mitsubishi UFJ and Bank of America
Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and Bank of America 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 Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi UFJ Financial and Bank of America, you can compare the effects of market volatilities on Mitsubishi UFJ and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and Bank of America.
Diversification Opportunities for Mitsubishi UFJ and Bank of America
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mitsubishi and Bank is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Financial are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Bank of America go up and down completely randomly.
Pair Corralation between Mitsubishi UFJ and Bank of America
Given the investment horizon of 90 days Mitsubishi UFJ Financial is expected to generate 1.24 times more return on investment than Bank of America. However, Mitsubishi UFJ is 1.24 times more volatile than Bank of America. It trades about 0.1 of its potential returns per unit of risk. Bank of America is currently generating about 0.11 per unit of risk. If you would invest 584.00 in Mitsubishi UFJ Financial on August 26, 2024 and sell it today you would earn a total of 598.00 from holding Mitsubishi UFJ Financial or generate 102.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi UFJ Financial vs. Bank of America
Performance |
| Timeline |
| Mitsubishi UFJ Financial |
| Bank of America |
Mitsubishi UFJ and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi UFJ and Bank of America
The main advantage of trading using opposite Mitsubishi UFJ and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Mitsubishi UFJ vs. Sumitomo Mitsui Financial | Mitsubishi UFJ vs. Mizuho Financial Group | Mitsubishi UFJ vs. Nomura Holdings ADR | Mitsubishi UFJ vs. Natwest Group PLC |
| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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