Correlation Between Bank of America and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both Bank of America and Mitsubishi UFJ 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 Bank of America and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on Bank of America and Mitsubishi UFJ 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 Bank of America with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Mitsubishi UFJ.
Diversification Opportunities for Bank of America and Mitsubishi UFJ
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Mitsubishi is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial and Bank of America 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 Bank of America are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of Bank of America i.e., Bank of America and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between Bank of America and Mitsubishi UFJ
Assuming the 90 days trading horizon Bank of America is expected to generate 0.94 times more return on investment than Mitsubishi UFJ. However, Bank of America is 1.06 times less risky than Mitsubishi UFJ. It trades about 0.38 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.28 per unit of risk. If you would invest 3,807 in Bank of America on September 3, 2024 and sell it today you would earn a total of 727.00 from holding Bank of America or generate 19.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Mitsubishi UFJ Financial
Performance |
| Timeline |
| Bank of America |
| Mitsubishi UFJ Financial |
Bank of America and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Mitsubishi UFJ
The main advantage of trading using opposite Bank of America and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Mitsubishi UFJ 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 Mitsubishi UFJ will offset losses from the drop in Mitsubishi UFJ's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. HSBC Holdings plc | Bank of America vs. Citigroup | Bank of America vs. Mitsubishi UFJ Financial |
| Mitsubishi UFJ vs. JPMorgan Chase Co | Mitsubishi UFJ vs. HSBC Holdings plc | Mitsubishi UFJ vs. Citigroup | Mitsubishi UFJ vs. Mitsubishi UFJ Financial |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |