Correlation Between Mitsubishi UFJ and LANC Old

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

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

Diversification Opportunities for Mitsubishi UFJ and LANC Old

0.08

Correlation Coefficient

Mitsubishi UFJ  LANC Old

Significant diversification

The 3 months correlation between Mitsubishi and LANC is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and LANC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANC Old 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 Financial are associated (or correlated) with LANC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANC Old has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and LANC Old go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and LANC Old

Assuming the 90 days horizon Mitsubishi UFJ Financial is expected to generate 2.76 times more return on investment than LANC Old. However, Mitsubishi UFJ is 2.76 times more volatile than LANC Old. It trades about 0.1 of its potential returns per unit of risk. LANC Old is currently generating about 0.18 per unit of risk. If you would invest  1,210  in Mitsubishi UFJ Financial on May 7, 2025 and sell it today you would earn a total of  257.00  from holding Mitsubishi UFJ Financial or generate 21.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.29%
Values	Daily Returns

Mitsubishi UFJ Financial  vs.  LANC Old

Mitsubishi UFJ Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, Mitsubishi UFJ reported solid returns over the last few months and may actually be approaching a breakup point.

LANC Old

Risk-Adjusted Performance

Good

Over the last 90 days LANC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain basic indicators, LANC Old exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsubishi UFJ and LANC Old

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

The idea behind Mitsubishi UFJ Financial and LANC Old 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.