Correlation Between Mitsubishi Heavy and VAT Group
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Heavy and VAT Group 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 VAT Group 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 VAT Group AG, you can compare the effects of market volatilities on Mitsubishi Heavy and VAT Group 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 VAT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Heavy and VAT Group.
Diversification Opportunities for Mitsubishi Heavy and VAT Group
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsubishi and VAT is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Heavy Industries and VAT Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAT Group AG 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 VAT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAT Group AG has no effect on the direction of Mitsubishi Heavy i.e., Mitsubishi Heavy and VAT Group go up and down completely randomly.
Pair Corralation between Mitsubishi Heavy and VAT Group
Assuming the 90 days horizon Mitsubishi Heavy Industries is expected to generate 3.11 times more return on investment than VAT Group. However, Mitsubishi Heavy is 3.11 times more volatile than VAT Group AG. It trades about 0.15 of its potential returns per unit of risk. VAT Group AG is currently generating about 0.22 per unit of risk. If you would invest 865.00 in Mitsubishi Heavy Industries on January 17, 2024 and sell it today you would earn a total of 69.00 from holding Mitsubishi Heavy Industries or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Heavy Industries vs. VAT Group AG
Performance |
| Timeline |
| Mitsubishi Heavy Ind |
| VAT Group AG |
Mitsubishi Heavy and VAT Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Heavy and VAT Group
The main advantage of trading using opposite Mitsubishi Heavy and VAT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Heavy position performs unexpectedly, VAT Group 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 VAT Group will offset losses from the drop in VAT Group's long position.| Mitsubishi Heavy vs. GE Aerospace | Mitsubishi Heavy vs. Eaton PLC | Mitsubishi Heavy vs. Illinois Tool Works | Mitsubishi Heavy vs. Parker Hannifin |
| VAT Group vs. GE Aerospace | VAT Group vs. Eaton PLC | VAT Group vs. Illinois Tool Works | VAT Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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