Correlation Between Mitsubishi UFJ and HUMANA

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

Diversification Opportunities for Mitsubishi UFJ and HUMANA

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Mitsubishi and HUMANA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC 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 HUMANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUMANA INC has no effect on the direction of Mitsubishi UFJ i.e., Mitsubishi UFJ and HUMANA go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and HUMANA

Assuming the 90 days horizon Mitsubishi UFJ Financial is expected to generate 4.07 times more return on investment than HUMANA. However, Mitsubishi UFJ is 4.07 times more volatile than HUMANA INC. It trades about 0.11 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.09 per unit of risk. If you would invest  936.00  in Mitsubishi UFJ Financial on December 29, 2023 and sell it today you would earn a total of  95.00  from holding Mitsubishi UFJ Financial or generate 10.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mitsubishi UFJ Financial  vs.  HUMANA INC

 Performance 
       Timeline  
Mitsubishi UFJ Financial 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
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 unfluctuating forward-looking indicators, Mitsubishi UFJ reported solid returns over the last few months and may actually be approaching a breakup point.
HUMANA INC 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mitsubishi UFJ and HUMANA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mitsubishi UFJ and HUMANA

The main advantage of trading using opposite Mitsubishi UFJ and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ position performs unexpectedly, HUMANA 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 HUMANA will offset losses from the drop in HUMANA's long position.
The idea behind Mitsubishi UFJ Financial and HUMANA INC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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