Correlation Between Mitsubishi UFJ and Bank of China
Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and Bank of China 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 China 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 China, you can compare the effects of market volatilities on Mitsubishi UFJ and Bank of China 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 China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and Bank of China.
Diversification Opportunities for Mitsubishi UFJ and Bank of China
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mitsubishi and Bank is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China 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 China. 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 China has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Bank of China go up and down completely randomly.
Pair Corralation between Mitsubishi UFJ and Bank of China
Given the investment horizon of 90 days Mitsubishi UFJ is expected to generate 1.26 times less return on investment than Bank of China. But when comparing it to its historical volatility, Mitsubishi UFJ Financial is 2.06 times less risky than Bank of China. It trades about 0.2 of its potential returns per unit of risk. Bank of China is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 49.00 in Bank of China on November 4, 2024 and sell it today you would earn a total of 4.00 from holding Bank of China or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi UFJ Financial vs. Bank of China
Performance |
| Timeline |
| Mitsubishi UFJ Financial |
| Bank of China |
Mitsubishi UFJ and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi UFJ and Bank of China
The main advantage of trading using opposite Mitsubishi UFJ and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ position performs unexpectedly, Bank of China 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 China will offset losses from the drop in Bank of China'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 China vs. China Construction Bank | Bank of China vs. Industrial and Commercial | Bank of China vs. Agricultural Bank | Bank of China vs. Bank of China |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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