Correlation Between Plug Power and Mitsubishi Electric
Can any of the company-specific risk be diversified away by investing in both Plug Power and Mitsubishi Electric 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 Plug Power and Mitsubishi Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plug Power and Mitsubishi Electric, you can compare the effects of market volatilities on Plug Power and Mitsubishi Electric 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 Plug Power with a short position of Mitsubishi Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plug Power and Mitsubishi Electric.
Diversification Opportunities for Plug Power and Mitsubishi Electric
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plug and Mitsubishi is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Mitsubishi Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric and Plug Power 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 Plug Power are associated (or correlated) with Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric has no effect on the direction of Plug Power i.e., Plug Power and Mitsubishi Electric go up and down completely randomly.
Pair Corralation between Plug Power and Mitsubishi Electric
Given the investment horizon of 90 days Plug Power is expected to under-perform the Mitsubishi Electric. In addition to that, Plug Power is 2.4 times more volatile than Mitsubishi Electric. It trades about -0.05 of its total potential returns per unit of risk. Mitsubishi Electric is currently generating about 0.08 per unit of volatility. If you would invest 897.00 in Mitsubishi Electric on January 17, 2024 and sell it today you would earn a total of 775.00 from holding Mitsubishi Electric or generate 86.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plug Power vs. Mitsubishi Electric
Performance |
| Timeline |
| Plug Power |
| Mitsubishi Electric |
Plug Power and Mitsubishi Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plug Power and Mitsubishi Electric
The main advantage of trading using opposite Plug Power and Mitsubishi Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plug Power position performs unexpectedly, Mitsubishi Electric 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 Electric will offset losses from the drop in Mitsubishi Electric's long position.| Plug Power vs. Advanced Energy Industries | Plug Power vs. Energizer Holdings | Plug Power vs. Kimball Electronics | Plug Power vs. Hollysys Automation Technologies |
| Mitsubishi Electric vs. FREYR Battery SA | Mitsubishi Electric vs. nVent Electric PLC | Mitsubishi Electric vs. Hubbell | Mitsubishi Electric vs. Advanced Energy Industries |
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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