Correlation Between Sumitomo Corp and Marubeni
Can any of the company-specific risk be diversified away by investing in both Sumitomo Corp and Marubeni 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 Corp and Marubeni into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Corp ADR and Marubeni, you can compare the effects of market volatilities on Sumitomo Corp and Marubeni 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 Corp with a short position of Marubeni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Corp and Marubeni.
Diversification Opportunities for Sumitomo Corp and Marubeni
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and Marubeni is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Corp ADR and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni and Sumitomo Corp 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 Corp ADR are associated (or correlated) with Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of Sumitomo Corp i.e., Sumitomo Corp and Marubeni go up and down completely randomly.
Pair Corralation between Sumitomo Corp and Marubeni
Assuming the 90 days horizon Sumitomo Corp is expected to generate 2.08 times less return on investment than Marubeni. But when comparing it to its historical volatility, Sumitomo Corp ADR is 2.28 times less risky than Marubeni. It trades about 0.04 of its potential returns per unit of risk. Marubeni is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,137 in Marubeni on September 3, 2024 and sell it today you would earn a total of 451.00 from holding Marubeni or generate 39.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sumitomo Corp ADR vs. Marubeni
Performance |
Timeline |
Sumitomo Corp ADR |
Marubeni |
Sumitomo Corp and Marubeni Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sumitomo Corp and Marubeni
The main advantage of trading using opposite Sumitomo Corp and Marubeni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Corp position performs unexpectedly, Marubeni 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 Marubeni will offset losses from the drop in Marubeni's long position.Sumitomo Corp vs. Grupo Bimbo SAB | Sumitomo Corp vs. Grupo Financiero Inbursa | Sumitomo Corp vs. Becle SA de | Sumitomo Corp vs. HUMANA INC |
Marubeni vs. Grupo Bimbo SAB | Marubeni vs. Grupo Financiero Inbursa | Marubeni vs. Becle SA de | Marubeni vs. HUMANA INC |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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