Correlation Between Sumitomo Mitsui and Mizuho Financial
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Mizuho Financial 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 Mizuho Financial 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 Mizuho Financial Group, you can compare the effects of market volatilities on Sumitomo Mitsui and Mizuho Financial 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 Mizuho Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Mizuho Financial.
Diversification Opportunities for Sumitomo Mitsui and Mizuho Financial
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sumitomo and Mizuho is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Mizuho Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizuho Financial 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 Mizuho Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizuho Financial has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Mizuho Financial go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Mizuho Financial
Given the investment horizon of 90 days Sumitomo Mitsui is expected to generate 1.4 times less return on investment than Mizuho Financial. In addition to that, Sumitomo Mitsui is 1.02 times more volatile than Mizuho Financial Group. It trades about 0.13 of its total potential returns per unit of risk. Mizuho Financial Group is currently generating about 0.19 per unit of volatility. If you would invest 405.00 in Mizuho Financial Group on September 13, 2024 and sell it today you would earn a total of 105.00 from holding Mizuho Financial Group or generate 25.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sumitomo Mitsui Financial vs. Mizuho Financial Group
Performance |
Timeline |
Sumitomo Mitsui Financial |
Mizuho Financial |
Sumitomo Mitsui and Mizuho Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sumitomo Mitsui and Mizuho Financial
The main advantage of trading using opposite Sumitomo Mitsui and Mizuho Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Mizuho Financial 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 Mizuho Financial will offset losses from the drop in Mizuho Financial's long position.Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. HSBC Holdings PLC |
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Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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