Correlation Between Vistra Energy and SUMITOMO

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

By analyzing existing cross correlation between Vistra Energy Corp and SUMITOMO MITSUI FINANCIAL, you can compare the effects of market volatilities on Vistra Energy and SUMITOMO 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 Vistra Energy with a short position of SUMITOMO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Energy and SUMITOMO.

Diversification Opportunities for Vistra Energy and SUMITOMO

0.19

Correlation Coefficient

Vistra Energy  SUMITOMO

Average diversification

The 3 months correlation between Vistra and SUMITOMO is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and SUMITOMO MITSUI FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO MITSUI FINANCIAL and Vistra Energy 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 Vistra Energy Corp are associated (or correlated) with SUMITOMO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO MITSUI FINANCIAL has no effect on the direction of Vistra Energy i.e., Vistra Energy and SUMITOMO go up and down completely randomly.

Pair Corralation between Vistra Energy and SUMITOMO

Considering the 90-day investment horizon Vistra Energy Corp is expected to under-perform the SUMITOMO. In addition to that, Vistra Energy is 2.78 times more volatile than SUMITOMO MITSUI FINANCIAL. It trades about -0.25 of its total potential returns per unit of risk. SUMITOMO MITSUI FINANCIAL is currently generating about -0.18 per unit of volatility. If you would invest  9,218  in SUMITOMO MITSUI FINANCIAL on December 2, 2024 and sell it today you would lose (523.00) from holding SUMITOMO MITSUI FINANCIAL or give up 5.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Vistra Energy Corp  vs.  SUMITOMO MITSUI FINANCIAL

Vistra Energy Corp

Risk-Adjusted Performance

Very Weak

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

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 latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SUMITOMO MITSUI FINANCIAL investors.

Pair Trading with Vistra Energy and SUMITOMO

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

The idea behind Vistra Energy Corp and SUMITOMO MITSUI FINANCIAL 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.