Correlation Between Air Lease and Mitsubishi UFJ

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

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

Diversification Opportunities for Air Lease and Mitsubishi UFJ

0.03

Correlation Coefficient

Air Lease  Mitsubishi UFJ

Significant diversification

The 3 months correlation between Air and Mitsubishi is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Mitsubishi UFJ Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Lease and Air Lease 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 Air Lease are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Lease has no effect on the direction of Air Lease i.e., Air Lease and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Air Lease and Mitsubishi UFJ

Allowing for the 90-day total investment horizon Air Lease is expected to generate 8.65 times more return on investment than Mitsubishi UFJ. However, Air Lease is 8.65 times more volatile than Mitsubishi UFJ Lease. It trades about 0.06 of its potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about -0.21 per unit of risk. If you would invest  4,822  in Air Lease on February 15, 2024 and sell it today you would earn a total of  118.00  from holding Air Lease or generate 2.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Air Lease  vs.  Mitsubishi UFJ Lease

Air Lease

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Air Lease disclosed solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi UFJ Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi UFJ Lease has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Air Lease and Mitsubishi UFJ

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

The idea behind Air Lease and Mitsubishi UFJ Lease 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.