Correlation Between Mitsubishi Heavy and Ultralife
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Heavy and Ultralife 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 Ultralife 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 Ultralife, you can compare the effects of market volatilities on Mitsubishi Heavy and Ultralife 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 Ultralife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Heavy and Ultralife.
Diversification Opportunities for Mitsubishi Heavy and Ultralife
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsubishi and Ultralife is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Heavy Industries and Ultralife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultralife 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 Ultralife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultralife has no effect on the direction of Mitsubishi Heavy i.e., Mitsubishi Heavy and Ultralife go up and down completely randomly.
Pair Corralation between Mitsubishi Heavy and Ultralife
Assuming the 90 days horizon Mitsubishi Heavy Industries is expected to under-perform the Ultralife. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mitsubishi Heavy Industries is 1.32 times less risky than Ultralife. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Ultralife is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 890.00 in Ultralife on January 26, 2024 and sell it today you would lose (17.00) from holding Ultralife or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Heavy Industries vs. Ultralife
Performance |
| Timeline |
| Mitsubishi Heavy Ind |
| Ultralife |
Mitsubishi Heavy and Ultralife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Heavy and Ultralife
The main advantage of trading using opposite Mitsubishi Heavy and Ultralife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Heavy position performs unexpectedly, Ultralife 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 Ultralife will offset losses from the drop in Ultralife'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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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