Correlation Between Powell Industries and Mitsubishi Electric
Can any of the company-specific risk be diversified away by investing in both Powell Industries and Mitsubishi Electric 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 Powell Industries and Mitsubishi Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powell Industries and Mitsubishi Electric Corp, you can compare the effects of market volatilities on Powell Industries and Mitsubishi Electric 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 Powell Industries with a short position of Mitsubishi Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powell Industries and Mitsubishi Electric.
Diversification Opportunities for Powell Industries and Mitsubishi Electric
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Powell and Mitsubishi is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Powell Industries and Mitsubishi Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric Corp and Powell Industries 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 Powell Industries are associated (or correlated) with Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric Corp has no effect on the direction of Powell Industries i.e., Powell Industries and Mitsubishi Electric go up and down completely randomly.
Pair Corralation between Powell Industries and Mitsubishi Electric
Given the investment horizon of 90 days Powell Industries is expected to generate 2.21 times more return on investment than Mitsubishi Electric. However, Powell Industries is 2.21 times more volatile than Mitsubishi Electric Corp. It trades about 0.12 of its potential returns per unit of risk. Mitsubishi Electric Corp is currently generating about 0.07 per unit of risk. If you would invest 7,475 in Powell Industries on August 25, 2024 and sell it today you would earn a total of 21,513 from holding Powell Industries or generate 287.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Powell Industries vs. Mitsubishi Electric Corp
Performance |
| Timeline |
| Powell Industries |
| Mitsubishi Electric Corp |
Powell Industries and Mitsubishi Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powell Industries and Mitsubishi Electric
The main advantage of trading using opposite Powell Industries and Mitsubishi Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powell Industries position performs unexpectedly, Mitsubishi Electric 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 Electric will offset losses from the drop in Mitsubishi Electric's long position.| Powell Industries vs. Kimball Electronics | Powell Industries vs. Hayward Holdings | Powell Industries vs. nVent Electric PLC | Powell Industries vs. Energizer Holdings |
| Mitsubishi Electric vs. Legrand SA ADR | Mitsubishi Electric vs. Powell Industries | Mitsubishi Electric vs. RF Industries | Mitsubishi Electric vs. Atkore International Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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