Correlation Between Sumitomo Mitsui and Fidelity National

Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Fidelity National 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 Sumitomo Mitsui and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sumitomo Mitsui Financial and Fidelity National Information, you can compare the effects of market volatilities on Sumitomo Mitsui and Fidelity National 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 Sumitomo Mitsui with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Fidelity National.

Diversification Opportunities for Sumitomo Mitsui and Fidelity National

-0.22

Correlation Coefficient

Sumitomo Mitsui  Fidelity National

Very good diversification

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

Pair Corralation between Sumitomo Mitsui and Fidelity National

Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 0.88 times more return on investment than Fidelity National. However, Sumitomo Mitsui Financial is 1.14 times less risky than Fidelity National. It trades about 0.1 of its potential returns per unit of risk. Fidelity National Information is currently generating about -0.15 per unit of risk. If you would invest  8,748  in Sumitomo Mitsui Financial on October 22, 2024 and sell it today you would earn a total of  198.00  from holding Sumitomo Mitsui Financial or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sumitomo Mitsui Financial  vs.  Fidelity National Information

Sumitomo Mitsui Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Mitsui Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Sumitomo Mitsui sustained solid returns over the last few months and may actually be approaching a breakup point.

Fidelity National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity National Information has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sumitomo Mitsui and Fidelity National

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

The idea behind Sumitomo Mitsui Financial and Fidelity National Information 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.