Correlation Between Yamaha and Mitsubishi Heavy
Can any of the company-specific risk be diversified away by investing in both Yamaha and Mitsubishi Heavy 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 Yamaha and Mitsubishi Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yamaha Motor Co and Mitsubishi Heavy Industries, you can compare the effects of market volatilities on Yamaha and Mitsubishi Heavy 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 Yamaha with a short position of Mitsubishi Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and Mitsubishi Heavy.
Diversification Opportunities for Yamaha and Mitsubishi Heavy
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Yamaha and Mitsubishi is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha Motor Co and Mitsubishi Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Heavy Ind and Yamaha 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 Yamaha Motor Co are associated (or correlated) with Mitsubishi Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Heavy Ind has no effect on the direction of Yamaha i.e., Yamaha and Mitsubishi Heavy go up and down completely randomly.
Pair Corralation between Yamaha and Mitsubishi Heavy
Assuming the 90 days horizon Yamaha is expected to generate 6.24 times less return on investment than Mitsubishi Heavy. But when comparing it to its historical volatility, Yamaha Motor Co is 1.29 times less risky than Mitsubishi Heavy. It trades about 0.03 of its potential returns per unit of risk. Mitsubishi Heavy Industries is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 531.00 in Mitsubishi Heavy Industries on September 12, 2024 and sell it today you would earn a total of 1,037 from holding Mitsubishi Heavy Industries or generate 195.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.62% |
| Values | Daily Returns |
Yamaha Motor Co vs. Mitsubishi Heavy Industries
Performance |
| Timeline |
| Yamaha Motor |
| Mitsubishi Heavy Ind |
Yamaha and Mitsubishi Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and Mitsubishi Heavy
The main advantage of trading using opposite Yamaha and Mitsubishi Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha position performs unexpectedly, Mitsubishi Heavy 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 Heavy will offset losses from the drop in Mitsubishi Heavy's long position.| Yamaha vs. Volkswagen AG 110 | Yamaha vs. Porsche Automobil Holding | Yamaha vs. Ferrari NV | Yamaha vs. Bayerische Motoren Werke |
| Mitsubishi Heavy vs. Kawasaki Heavy Industries | Mitsubishi Heavy vs. Mitsubishi Electric Corp | Mitsubishi Heavy vs. Mitsubishi Corp | Mitsubishi Heavy vs. Marubeni Corp ADR |
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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