Correlation Between Retail Estates and Mitsubishi Materials
Can any of the company-specific risk be diversified away by investing in both Retail Estates and Mitsubishi Materials 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 Retail Estates and Mitsubishi Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and Mitsubishi Materials, you can compare the effects of market volatilities on Retail Estates and Mitsubishi Materials 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 Retail Estates with a short position of Mitsubishi Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Mitsubishi Materials.
Diversification Opportunities for Retail Estates and Mitsubishi Materials
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Retail and Mitsubishi is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and Mitsubishi Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Materials and Retail Estates 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 Retail Estates NV are associated (or correlated) with Mitsubishi Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Materials has no effect on the direction of Retail Estates i.e., Retail Estates and Mitsubishi Materials go up and down completely randomly.
Pair Corralation between Retail Estates and Mitsubishi Materials
Assuming the 90 days horizon Retail Estates NV is expected to generate 0.59 times more return on investment than Mitsubishi Materials. However, Retail Estates NV is 1.69 times less risky than Mitsubishi Materials. It trades about -0.02 of its potential returns per unit of risk. Mitsubishi Materials is currently generating about -0.05 per unit of risk. If you would invest 6,055 in Retail Estates NV on September 3, 2024 and sell it today you would lose (225.00) from holding Retail Estates NV or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. Mitsubishi Materials
Performance |
| Timeline |
| Retail Estates NV |
| Mitsubishi Materials |
Retail Estates and Mitsubishi Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Mitsubishi Materials
The main advantage of trading using opposite Retail Estates and Mitsubishi Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates position performs unexpectedly, Mitsubishi Materials 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 Materials will offset losses from the drop in Mitsubishi Materials' long position.| Retail Estates vs. Axway Software SA | Retail Estates vs. ATOSS SOFTWARE | Retail Estates vs. G8 EDUCATION | Retail Estates vs. American Public Education |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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