Correlation Between SUMITOMO and Weyco

Can any of the company-specific risk be diversified away by investing in both SUMITOMO and Weyco 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 and Weyco 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 Weyco Group, you can compare the effects of market volatilities on SUMITOMO and Weyco 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 with a short position of Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUMITOMO and Weyco.

Diversification Opportunities for SUMITOMO and Weyco

-0.17

Correlation Coefficient

SUMITOMO  Weyco

Good diversification

The 3 months correlation between SUMITOMO and Weyco is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SUMITOMO MITSUI FINANCIAL and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and SUMITOMO 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 Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of SUMITOMO i.e., SUMITOMO and Weyco go up and down completely randomly.

Pair Corralation between SUMITOMO and Weyco

Assuming the 90 days trading horizon SUMITOMO MITSUI FINANCIAL is expected to generate 0.14 times more return on investment than Weyco. However, SUMITOMO MITSUI FINANCIAL is 7.15 times less risky than Weyco. It trades about -0.05 of its potential returns per unit of risk. Weyco Group is currently generating about -0.02 per unit of risk. If you would invest  9,797  in SUMITOMO MITSUI FINANCIAL on December 2, 2024 and sell it today you would lose (93.00) from holding SUMITOMO MITSUI FINANCIAL or give up 0.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

SUMITOMO MITSUI FINANCIAL  vs.  Weyco Group

SUMITOMO MITSUI FINANCIAL

Risk-Adjusted Performance

Very Weak

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

Weyco Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Weyco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Weyco is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SUMITOMO and Weyco

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

The idea behind SUMITOMO MITSUI FINANCIAL and Weyco Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.