Correlation Between Mitsubishi Heavy and ABB
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Heavy and ABB 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 Heavy and ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Heavy Industries and ABB Ltd ADR, you can compare the effects of market volatilities on Mitsubishi Heavy and ABB 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 Heavy with a short position of ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Heavy and ABB.
Diversification Opportunities for Mitsubishi Heavy and ABB
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsubishi and ABB is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Heavy Industries and ABB Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB Ltd ADR and Mitsubishi Heavy 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 Heavy Industries are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB Ltd ADR has no effect on the direction of Mitsubishi Heavy i.e., Mitsubishi Heavy and ABB go up and down completely randomly.
Pair Corralation between Mitsubishi Heavy and ABB
If you would invest 3,900 in ABB Ltd ADR on January 21, 2024 and sell it today you would earn a total of 0.00 from holding ABB Ltd ADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Mitsubishi Heavy Industries vs. ABB Ltd ADR
Performance |
| Timeline |
| Mitsubishi Heavy Ind |
| ABB Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mitsubishi Heavy and ABB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Heavy and ABB
The main advantage of trading using opposite Mitsubishi Heavy and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Heavy position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.| Mitsubishi Heavy vs. GE Aerospace | Mitsubishi Heavy vs. Eaton PLC | Mitsubishi Heavy vs. Illinois Tool Works | Mitsubishi Heavy vs. Parker Hannifin |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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