Correlation Between AB SKF and Mitsubishi Electric
Can any of the company-specific risk be diversified away by investing in both AB SKF 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 AB SKF and Mitsubishi Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB SKF and Mitsubishi Electric Corp, you can compare the effects of market volatilities on AB SKF 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 AB SKF with a short position of Mitsubishi Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and Mitsubishi Electric.
Diversification Opportunities for AB SKF and Mitsubishi Electric
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SKFRY and Mitsubishi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF 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 AB SKF 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 AB SKF 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 AB SKF i.e., AB SKF and Mitsubishi Electric go up and down completely randomly.
Pair Corralation between AB SKF and Mitsubishi Electric
Assuming the 90 days horizon AB SKF is expected to generate 2.05 times less return on investment than Mitsubishi Electric. But when comparing it to its historical volatility, AB SKF is 1.26 times less risky than Mitsubishi Electric. It trades about 0.03 of its potential returns per unit of risk. Mitsubishi Electric Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,251 in Mitsubishi Electric Corp on November 1, 2024 and sell it today you would earn a total of 1,077 from holding Mitsubishi Electric Corp or generate 47.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB SKF vs. Mitsubishi Electric Corp
Performance |
| Timeline |
| AB SKF |
| Mitsubishi Electric Corp |
AB SKF and Mitsubishi Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB SKF and Mitsubishi Electric
The main advantage of trading using opposite AB SKF and Mitsubishi Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SKF 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.| AB SKF vs. Eastern Co | AB SKF vs. Hillman Solutions Corp | AB SKF vs. Techtronic Industries Ltd | AB SKF vs. Husqvarna AB |
| 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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