Correlation Between Yamaha and Mitsubishi Electric
Can any of the company-specific risk be diversified away by investing in both Yamaha 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 Yamaha and Mitsubishi Electric 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 Electric Corp, you can compare the effects of market volatilities on Yamaha 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 Yamaha with a short position of Mitsubishi Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and Mitsubishi Electric.
Diversification Opportunities for Yamaha and Mitsubishi Electric
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yamaha and Mitsubishi is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha Motor Co 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 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 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 Yamaha i.e., Yamaha and Mitsubishi Electric go up and down completely randomly.
Pair Corralation between Yamaha and Mitsubishi Electric
Assuming the 90 days horizon Yamaha Motor Co is expected to generate 26.21 times more return on investment than Mitsubishi Electric. However, Yamaha is 26.21 times more volatile than Mitsubishi Electric Corp. It trades about 0.15 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 611.00 in Yamaha Motor Co on September 12, 2024 and sell it today you would earn a total of 274.00 from holding Yamaha Motor Co or generate 44.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.25% |
| Values | Daily Returns |
Yamaha Motor Co vs. Mitsubishi Electric Corp
Performance |
| Timeline |
| Yamaha Motor |
| Mitsubishi Electric Corp |
Yamaha and Mitsubishi Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and Mitsubishi Electric
The main advantage of trading using opposite Yamaha and Mitsubishi Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha 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.| Yamaha vs. Volkswagen AG 110 | Yamaha vs. Porsche Automobil Holding | Yamaha vs. Ferrari NV | Yamaha vs. Bayerische Motoren Werke |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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