Correlation Between Mitsubishi Materials and Great-West Lifeco
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials and Great-West Lifeco 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 Materials and Great-West Lifeco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Materials and Great West Lifeco, you can compare the effects of market volatilities on Mitsubishi Materials and Great-West Lifeco 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 Materials with a short position of Great-West Lifeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and Great-West Lifeco.
Diversification Opportunities for Mitsubishi Materials and Great-West Lifeco
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mitsubishi and Great-West is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco and Mitsubishi Materials 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 Materials are associated (or correlated) with Great-West Lifeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of Mitsubishi Materials i.e., Mitsubishi Materials and Great-West Lifeco go up and down completely randomly.
Pair Corralation between Mitsubishi Materials and Great-West Lifeco
Assuming the 90 days trading horizon Mitsubishi Materials is expected to generate 2.53 times less return on investment than Great-West Lifeco. In addition to that, Mitsubishi Materials is 1.46 times more volatile than Great West Lifeco. It trades about 0.04 of its total potential returns per unit of risk. Great West Lifeco is currently generating about 0.14 per unit of volatility. If you would invest 2,568 in Great West Lifeco on November 3, 2024 and sell it today you would earn a total of 532.00 from holding Great West Lifeco or generate 20.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Materials vs. Great West Lifeco
Performance |
| Timeline |
| Mitsubishi Materials |
| Great West Lifeco |
Mitsubishi Materials and Great-West Lifeco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Materials and Great-West Lifeco
The main advantage of trading using opposite Mitsubishi Materials and Great-West Lifeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Materials position performs unexpectedly, Great-West Lifeco 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 Great-West Lifeco will offset losses from the drop in Great-West Lifeco's long position.| Mitsubishi Materials vs. Taiwan Semiconductor Manufacturing | Mitsubishi Materials vs. Summit Materials | Mitsubishi Materials vs. ON SEMICONDUCTOR | Mitsubishi Materials vs. TOREX SEMICONDUCTOR LTD |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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