Correlation Between Mitsubishi UFJ and BAUER Aktiengesellscha

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

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

Diversification Opportunities for Mitsubishi UFJ and BAUER Aktiengesellscha

-0.38

Correlation Coefficient

Mitsubishi UFJ  BAUER Aktiengesellscha

Very good diversification

The 3 months correlation between Mitsubishi and BAUER is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and BAUER Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAUER Aktiengesellschaft and Mitsubishi UFJ 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 Mitsubishi UFJ Financial are associated (or correlated) with BAUER Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAUER Aktiengesellschaft has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and BAUER Aktiengesellscha go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and BAUER Aktiengesellscha

If you would invest  610.00  in BAUER Aktiengesellschaft on January 31, 2024 and sell it today you would earn a total of  0.00  from holding BAUER Aktiengesellschaft or generate 0.0% return on investment over 90 days.

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

Mitsubishi UFJ Financial  vs.  BAUER Aktiengesellschaft

Mitsubishi UFJ Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward-looking indicators, Mitsubishi UFJ may actually be approaching a critical reversion point that can send shares even higher in May 2024.

BAUER Aktiengesellschaft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAUER Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, BAUER Aktiengesellscha is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsubishi UFJ and BAUER Aktiengesellscha

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

The idea behind Mitsubishi UFJ Financial and BAUER Aktiengesellschaft 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.