Correlation Between Sterling Construction and Mitsubishi Materials
Can any of the company-specific risk be diversified away by investing in both Sterling Construction 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 Sterling Construction and Mitsubishi Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and Mitsubishi Materials, you can compare the effects of market volatilities on Sterling Construction 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 Sterling Construction with a short position of Mitsubishi Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Mitsubishi Materials.
Diversification Opportunities for Sterling Construction and Mitsubishi Materials
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and Mitsubishi is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Mitsubishi Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Materials and Sterling Construction 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 Sterling Construction 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 Sterling Construction i.e., Sterling Construction and Mitsubishi Materials go up and down completely randomly.
Pair Corralation between Sterling Construction and Mitsubishi Materials
Assuming the 90 days horizon Sterling Construction is expected to under-perform the Mitsubishi Materials. In addition to that, Sterling Construction is 2.17 times more volatile than Mitsubishi Materials. It trades about -0.04 of its total potential returns per unit of risk. Mitsubishi Materials is currently generating about 0.06 per unit of volatility. If you would invest 1,480 in Mitsubishi Materials on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Mitsubishi Materials or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. Mitsubishi Materials
Performance |
| Timeline |
| Sterling Construction |
| Mitsubishi Materials |
Sterling Construction and Mitsubishi Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and Mitsubishi Materials
The main advantage of trading using opposite Sterling Construction and Mitsubishi Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction 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.| Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. SIVERS SEMICONDUCTORS AB | Sterling Construction vs. Norsk Hydro ASA | Sterling Construction vs. Reliance Steel Aluminum |
| Mitsubishi Materials vs. BW OFFSHORE LTD | Mitsubishi Materials vs. DFS Furniture PLC | Mitsubishi Materials vs. Autohome ADR | Mitsubishi Materials vs. CSSC Offshore Marine |
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 CEOs Directory module to screen CEOs from public companies around the world.
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