Correlation Between Bloom Energy and Mitsubishi UFJ

Can any of the company-specific risk be diversified away by investing in both Bloom Energy and Mitsubishi UFJ 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 Bloom Energy and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bloom Energy Corp and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on Bloom Energy and Mitsubishi UFJ 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 Bloom Energy with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Energy and Mitsubishi UFJ.

Diversification Opportunities for Bloom Energy and Mitsubishi UFJ

-0.19

Correlation Coefficient

Bloom Energy  Mitsubishi UFJ

Good diversification

The 3 months correlation between Bloom and Mitsubishi is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial and Bloom Energy 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 Bloom Energy Corp are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of Bloom Energy i.e., Bloom Energy and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Bloom Energy and Mitsubishi UFJ

Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to generate 4.17 times more return on investment than Mitsubishi UFJ. However, Bloom Energy is 4.17 times more volatile than Mitsubishi UFJ Financial. It trades about 0.38 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.13 per unit of risk. If you would invest  1,099  in Bloom Energy Corp on February 29, 2024 and sell it today you would earn a total of  554.00  from holding Bloom Energy Corp or generate 50.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bloom Energy Corp  vs.  Mitsubishi UFJ Financial

Bloom Energy Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Bloom Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi UFJ Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, Mitsubishi UFJ is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bloom Energy and Mitsubishi UFJ

The main advantage of trading using opposite Bloom Energy and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloom Energy position performs unexpectedly, Mitsubishi UFJ 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 UFJ will offset losses from the drop in Mitsubishi UFJ's long position.

The idea behind Bloom Energy Corp and Mitsubishi UFJ Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.