Correlation Between Mitsubishi UFJ and Golden Arrow

Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and Golden Arrow 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 Golden Arrow 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 Golden Arrow Merger, you can compare the effects of market volatilities on Mitsubishi UFJ and Golden Arrow 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 Golden Arrow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and Golden Arrow.

Diversification Opportunities for Mitsubishi UFJ and Golden Arrow

-0.6

Correlation Coefficient

Mitsubishi UFJ  Golden Arrow

Excellent diversification

The 3 months correlation between Mitsubishi and Golden is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and Golden Arrow Merger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Arrow Merger 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 Golden Arrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Arrow Merger has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Golden Arrow go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and Golden Arrow

Assuming the 90 days horizon Mitsubishi UFJ Financial is expected to generate 0.63 times more return on investment than Golden Arrow. However, Mitsubishi UFJ Financial is 1.58 times less risky than Golden Arrow. It trades about 0.06 of its potential returns per unit of risk. Golden Arrow Merger is currently generating about -0.06 per unit of risk. If you would invest  601.00  in Mitsubishi UFJ Financial on September 14, 2024 and sell it today you would earn a total of  574.00  from holding Mitsubishi UFJ Financial or generate 95.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	89.46%
Values	Daily Returns

Mitsubishi UFJ Financial  vs.  Golden Arrow Merger

Mitsubishi UFJ Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Mitsubishi UFJ reported solid returns over the last few months and may actually be approaching a breakup point.

Golden Arrow Merger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Arrow Merger has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Golden Arrow is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mitsubishi UFJ and Golden Arrow

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

The idea behind Mitsubishi UFJ Financial and Golden Arrow Merger 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.