Correlation Between Sumitomo Rubber and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Nomad Foods 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 Rubber and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Rubber Industries and Nomad Foods, you can compare the effects of market volatilities on Sumitomo Rubber and Nomad Foods 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 Rubber with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Nomad Foods.
Diversification Opportunities for Sumitomo Rubber and Nomad Foods
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sumitomo and Nomad is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and Sumitomo Rubber 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 Rubber Industries are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Nomad Foods go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Nomad Foods
Assuming the 90 days horizon Sumitomo Rubber is expected to generate 13.36 times less return on investment than Nomad Foods. But when comparing it to its historical volatility, Sumitomo Rubber Industries is 1.39 times less risky than Nomad Foods. It trades about 0.01 of its potential returns per unit of risk. Nomad Foods is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,550 in Nomad Foods on October 20, 2024 and sell it today you would earn a total of 60.00 from holding Nomad Foods or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Nomad Foods
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Nomad Foods |
Sumitomo Rubber and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Nomad Foods
The main advantage of trading using opposite Sumitomo Rubber and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.| Sumitomo Rubber vs. CANON MARKETING JP | Sumitomo Rubber vs. SALESFORCE INC CDR | Sumitomo Rubber vs. SIDETRADE EO 1 | Sumitomo Rubber vs. Taiwan Semiconductor Manufacturing |
| Nomad Foods vs. Sumitomo Rubber Industries | Nomad Foods vs. Compagnie Plastic Omnium | Nomad Foods vs. Tyson Foods | Nomad Foods vs. Materialise NV |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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