Correlation Between Mitsubishi UFJ and Eiffage SA

Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ and Eiffage SA 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 Eiffage SA 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 Eiffage SA ADR, you can compare the effects of market volatilities on Mitsubishi UFJ and Eiffage SA 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 Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and Eiffage SA.

Diversification Opportunities for Mitsubishi UFJ and Eiffage SA

0.51

Correlation Coefficient

Mitsubishi UFJ  Eiffage SA

Very weak diversification

The 3 months correlation between Mitsubishi and Eiffage is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and Eiffage SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA ADR 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 Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA ADR has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and Eiffage SA go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and Eiffage SA

Given the investment horizon of 90 days Mitsubishi UFJ Financial is expected to generate 0.99 times more return on investment than Eiffage SA. However, Mitsubishi UFJ Financial is 1.01 times less risky than Eiffage SA. It trades about 0.12 of its potential returns per unit of risk. Eiffage SA ADR is currently generating about 0.02 per unit of risk. If you would invest  1,226  in Mitsubishi UFJ Financial on May 7, 2025 and sell it today you would earn a total of  152.00  from holding Mitsubishi UFJ Financial or generate 12.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Mitsubishi UFJ Financial  vs.  Eiffage SA ADR

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 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Mitsubishi UFJ reported solid returns over the last few months and may actually be approaching a breakup point.

Eiffage SA ADR

Risk-Adjusted Performance

Weak

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

Pair Trading with Mitsubishi UFJ and Eiffage SA

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

The idea behind Mitsubishi UFJ Financial and Eiffage SA ADR 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.