Correlation Between FTAI Infrastructure and Mitsubishi Corp

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

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

Diversification Opportunities for FTAI Infrastructure and Mitsubishi Corp

0.87

Correlation Coefficient

FTAI Infrastructure  Mitsubishi Corp

Very poor diversification

The 3 months correlation between FTAI and Mitsubishi is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Infrastructure and Mitsubishi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Corp and FTAI Infrastructure 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 FTAI Infrastructure 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 FTAI Infrastructure i.e., FTAI Infrastructure and Mitsubishi Corp go up and down completely randomly.

Pair Corralation between FTAI Infrastructure and Mitsubishi Corp

Considering the 90-day investment horizon FTAI Infrastructure is expected to generate 1.96 times more return on investment than Mitsubishi Corp. However, FTAI Infrastructure is 1.96 times more volatile than Mitsubishi Corp. It trades about 0.31 of its potential returns per unit of risk. Mitsubishi Corp is currently generating about 0.1 per unit of risk. If you would invest  587.00  in FTAI Infrastructure on January 17, 2024 and sell it today you would earn a total of  95.00  from holding FTAI Infrastructure or generate 16.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

FTAI Infrastructure  vs.  Mitsubishi Corp

FTAI Infrastructure

Risk-Adjusted Performance

29 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Infrastructure are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, FTAI Infrastructure reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Mitsubishi Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTAI Infrastructure and Mitsubishi Corp

The main advantage of trading using opposite FTAI Infrastructure and Mitsubishi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Infrastructure 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 FTAI Infrastructure 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.