Correlation Between Anheuser Busch and Mitsubishi UFJ

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

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

Diversification Opportunities for Anheuser Busch and Mitsubishi UFJ

0.83

Correlation Coefficient

Anheuser Busch  Mitsubishi UFJ

Very poor diversification

The 3 months correlation between Anheuser and Mitsubishi is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Mitsubishi UFJ Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Lease and Anheuser Busch 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 Anheuser Busch Inbev 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 Lease has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Anheuser Busch and Mitsubishi UFJ

Considering the 90-day investment horizon Anheuser Busch Inbev is expected to under-perform the Mitsubishi UFJ. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch Inbev is 2.51 times less risky than Mitsubishi UFJ. The stock trades about -0.17 of its potential returns per unit of risk. The Mitsubishi UFJ Lease is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,392  in Mitsubishi UFJ Lease on September 4, 2024 and sell it today you would lose (196.00) from holding Mitsubishi UFJ Lease or give up 14.08% of portfolio value over 90 days.

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

Anheuser Busch Inbev  vs.  Mitsubishi UFJ Lease

Anheuser Busch Inbev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch Inbev has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mitsubishi UFJ Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi UFJ Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Anheuser Busch and Mitsubishi UFJ

The main advantage of trading using opposite Anheuser Busch and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch 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 Anheuser Busch Inbev and Mitsubishi UFJ Lease 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.