Correlation Between Mitsubishi UFJ and Lend Lease

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

By analyzing existing cross correlation between Mitsubishi UFJ Lease and Lend Lease Group, you can compare the effects of market volatilities on Mitsubishi UFJ and Lend Lease 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 Lend Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and Lend Lease.

Diversification Opportunities for Mitsubishi UFJ and Lend Lease

0.06

Correlation Coefficient

Mitsubishi UFJ  Lend Lease

Significant diversification

The 3 months correlation between Mitsubishi and Lend is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Lease and Lend Lease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lend Lease Group 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 Lease are associated (or correlated) with Lend Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lend Lease Group has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Lend Lease go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and Lend Lease

Assuming the 90 days horizon Mitsubishi UFJ Lease is expected to under-perform the Lend Lease. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mitsubishi UFJ Lease is 2.96 times less risky than Lend Lease. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Lend Lease Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  407.00  in Lend Lease Group on February 5, 2024 and sell it today you would earn a total of  13.00  from holding Lend Lease Group or generate 3.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Mitsubishi UFJ Lease  vs.  Lend Lease Group

Mitsubishi UFJ Lease

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Lease are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mitsubishi UFJ is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Lend Lease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lend Lease Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mitsubishi UFJ and Lend Lease

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

The idea behind Mitsubishi UFJ Lease and Lend Lease Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.