Correlation Between Mitsubishi Electric and Corning Incorporated

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

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

Diversification Opportunities for Mitsubishi Electric and Corning Incorporated

0.67

Correlation Coefficient

Mitsubishi Electric  Corning Incorporated

Poor diversification

The 3 months correlation between Mitsubishi and Corning is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Electric and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated and Mitsubishi Electric 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 Electric are associated (or correlated) with Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of Mitsubishi Electric i.e., Mitsubishi Electric and Corning Incorporated go up and down completely randomly.

Pair Corralation between Mitsubishi Electric and Corning Incorporated

Assuming the 90 days trading horizon Mitsubishi Electric is expected to generate 1.33 times less return on investment than Corning Incorporated. In addition to that, Mitsubishi Electric is 1.06 times more volatile than Corning Incorporated. It trades about 0.09 of its total potential returns per unit of risk. Corning Incorporated is currently generating about 0.13 per unit of volatility. If you would invest  3,993  in Corning Incorporated on October 1, 2024 and sell it today you would earn a total of  621.00  from holding Corning Incorporated or generate 15.55% return on investment over 90 days.

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

Mitsubishi Electric  vs.  Corning Incorporated

Mitsubishi Electric

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Electric are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Mitsubishi Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Corning Incorporated

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corning Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsubishi Electric and Corning Incorporated

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

The idea behind Mitsubishi Electric and Corning Incorporated 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.