Correlation Between Mitsubishi Materials and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials and Gildan Activewear 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 Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Materials and Gildan Activewear, you can compare the effects of market volatilities on Mitsubishi Materials and Gildan Activewear 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 Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and Gildan Activewear.
Diversification Opportunities for Mitsubishi Materials and Gildan Activewear
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsubishi and Gildan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear 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 Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of Mitsubishi Materials i.e., Mitsubishi Materials and Gildan Activewear go up and down completely randomly.
Pair Corralation between Mitsubishi Materials and Gildan Activewear
Assuming the 90 days trading horizon Mitsubishi Materials is expected to generate 7.52 times less return on investment than Gildan Activewear. In addition to that, Mitsubishi Materials is 1.1 times more volatile than Gildan Activewear. It trades about 0.01 of its total potential returns per unit of risk. Gildan Activewear is currently generating about 0.08 per unit of volatility. If you would invest 2,609 in Gildan Activewear on September 3, 2024 and sell it today you would earn a total of 2,051 from holding Gildan Activewear or generate 78.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Materials vs. Gildan Activewear
Performance |
| Timeline |
| Mitsubishi Materials |
| Gildan Activewear |
Mitsubishi Materials and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Materials and Gildan Activewear
The main advantage of trading using opposite Mitsubishi Materials and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Materials position performs unexpectedly, Gildan Activewear 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 Gildan Activewear will offset losses from the drop in Gildan Activewear's long position.| Mitsubishi Materials vs. Costco Wholesale Corp | Mitsubishi Materials vs. PARKEN Sport Entertainment | Mitsubishi Materials vs. JD SPORTS FASH | Mitsubishi Materials vs. Beijing Media |
| Gildan Activewear vs. GFL ENVIRONM | Gildan Activewear vs. American Airlines Group | Gildan Activewear vs. Nippon Steel | Gildan Activewear vs. Aegean Airlines SA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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