Correlation Between PagSeguro Digital and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both PagSeguro Digital 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 PagSeguro Digital and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PagSeguro Digital and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on PagSeguro Digital 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 PagSeguro Digital with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of PagSeguro Digital and Mitsubishi UFJ.
Diversification Opportunities for PagSeguro Digital and Mitsubishi UFJ
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PagSeguro and Mitsubishi is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding PagSeguro Digital 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 PagSeguro Digital 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 PagSeguro Digital 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 PagSeguro Digital i.e., PagSeguro Digital and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between PagSeguro Digital and Mitsubishi UFJ
Assuming the 90 days trading horizon PagSeguro Digital is expected to generate 1.57 times more return on investment than Mitsubishi UFJ. However, PagSeguro Digital is 1.57 times more volatile than Mitsubishi UFJ Financial. It trades about 0.16 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about -0.01 per unit of risk. If you would invest 837.00 in PagSeguro Digital on November 28, 2024 and sell it today you would earn a total of 75.00 from holding PagSeguro Digital or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PagSeguro Digital vs. Mitsubishi UFJ Financial
Performance |
| Timeline |
| PagSeguro Digital |
| Mitsubishi UFJ Financial |
PagSeguro Digital and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PagSeguro Digital and Mitsubishi UFJ
The main advantage of trading using opposite PagSeguro Digital and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PagSeguro Digital 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.| PagSeguro Digital vs. Medical Properties Trust, | PagSeguro Digital vs. Check Point Software | PagSeguro Digital vs. Guidewire Software, | PagSeguro Digital vs. MAHLE Metal Leve |
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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 Positions Ratings module to 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.
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