Correlation Between Mastercard and Mitsubishi UFJ

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

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

Diversification Opportunities for Mastercard and Mitsubishi UFJ

-0.58

Correlation Coefficient

Mastercard  Mitsubishi UFJ

Excellent diversification

The 3 months correlation between Mastercard and Mitsubishi is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard 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 Mastercard 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 Mastercard 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 Mastercard i.e., Mastercard and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Mastercard and Mitsubishi UFJ

Allowing for the 90-day total investment horizon Mastercard is expected to generate 0.3 times more return on investment than Mitsubishi UFJ. However, Mastercard is 3.34 times less risky than Mitsubishi UFJ. It trades about 0.17 of its potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about -0.06 per unit of risk. If you would invest  48,148  in Mastercard on September 3, 2024 and sell it today you would earn a total of  5,146  from holding Mastercard or generate 10.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Mastercard  vs.  Mitsubishi UFJ Lease

Mastercard

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mastercard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Mastercard and Mitsubishi UFJ

The main advantage of trading using opposite Mastercard and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard 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 Mastercard 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.