Correlation Between Mitsubishi UFJ and KWG Resources
Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and KWG Resources 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 KWG Resources 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 KWG Resources, you can compare the effects of market volatilities on Mitsubishi UFJ and KWG Resources 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 KWG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and KWG Resources.
Diversification Opportunities for Mitsubishi UFJ and KWG Resources
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitsubishi and KWG is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and KWG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KWG Resources 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 KWG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KWG Resources has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and KWG Resources go up and down completely randomly.
Pair Corralation between Mitsubishi UFJ and KWG Resources
Given the investment horizon of 90 days Mitsubishi UFJ is expected to generate 6.4 times less return on investment than KWG Resources. But when comparing it to its historical volatility, Mitsubishi UFJ Financial is 9.65 times less risky than KWG Resources. It trades about 0.1 of its potential returns per unit of risk. KWG Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.00 in KWG Resources on August 29, 2024 and sell it today you would lose (0.95) from holding KWG Resources or give up 47.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi UFJ Financial vs. KWG Resources
Performance |
| Timeline |
| Mitsubishi UFJ Financial |
| KWG Resources |
Mitsubishi UFJ and KWG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi UFJ and KWG Resources
The main advantage of trading using opposite Mitsubishi UFJ and KWG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ position performs unexpectedly, KWG Resources 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 KWG Resources will offset losses from the drop in KWG Resources' 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 |
| KWG Resources vs. Ascendant Resources | KWG Resources vs. Cantex Mine Development | KWG Resources vs. Amarc Resources | KWG Resources vs. Sterling Metals Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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