Correlation Between Griffon and Mitsubishi UFJ

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Can any of the company-specific risk be diversified away by investing in both Griffon 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 Griffon and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on Griffon 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 Griffon with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and Mitsubishi UFJ.

Diversification Opportunities for Griffon and Mitsubishi UFJ

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Griffon and Mitsubishi is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial and Griffon 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 Griffon 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 Financial has no effect on the direction of Griffon i.e., Griffon and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Griffon and Mitsubishi UFJ

Considering the 90-day investment horizon Griffon is expected to generate 1.09 times less return on investment than Mitsubishi UFJ. But when comparing it to its historical volatility, Griffon is 1.29 times less risky than Mitsubishi UFJ. It trades about 0.09 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  486.00  in Mitsubishi UFJ Financial on April 20, 2024 and sell it today you would earn a total of  659.00  from holding Mitsubishi UFJ Financial or generate 135.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy89.9%
ValuesDaily Returns

Griffon  vs.  Mitsubishi UFJ Financial

 Performance 
       Timeline  
Griffon 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon may actually be approaching a critical reversion point that can send shares even higher in August 2024.
Mitsubishi UFJ Financial 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward-looking indicators, Mitsubishi UFJ reported solid returns over the last few months and may actually be approaching a breakup point.

Griffon and Mitsubishi UFJ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Griffon and Mitsubishi UFJ

The main advantage of trading using opposite Griffon and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon 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 Griffon and Mitsubishi UFJ Financial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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