Correlation Between Coinbase Global and Mitsubishi Corp

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

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

Diversification Opportunities for Coinbase Global and Mitsubishi Corp

-0.66

Correlation Coefficient

Coinbase Global  Mitsubishi Corp

Excellent diversification

The 3 months correlation between Coinbase and Mitsubishi is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Coinbase Global and Mitsubishi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Corp and Coinbase Global 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 Coinbase Global are associated (or correlated) with Mitsubishi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Corp has no effect on the direction of Coinbase Global i.e., Coinbase Global and Mitsubishi Corp go up and down completely randomly.

Pair Corralation between Coinbase Global and Mitsubishi Corp

Given the investment horizon of 90 days Coinbase Global is expected to generate 5.8 times more return on investment than Mitsubishi Corp. However, Coinbase Global is 5.8 times more volatile than Mitsubishi Corp. It trades about 0.24 of its potential returns per unit of risk. Mitsubishi Corp is currently generating about -0.28 per unit of risk. If you would invest  20,420  in Coinbase Global on August 18, 2024 and sell it today you would earn a total of  10,165  from holding Coinbase Global or generate 49.78% return on investment over 90 days.

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

Coinbase Global  vs.  Mitsubishi Corp

Coinbase Global

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coinbase Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Coinbase Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Coinbase Global and Mitsubishi Corp

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

The idea behind Coinbase Global and Mitsubishi Corp 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.