Correlation Between Sumitomo Rubber and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment, you can compare the effects of market volatilities on Sumitomo Rubber and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Gladstone Investment.
Diversification Opportunities for Sumitomo Rubber and Gladstone Investment
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sumitomo and Gladstone is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Gladstone Investment go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Gladstone Investment
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.0 times more return on investment than Gladstone Investment. However, Sumitomo Rubber Industries is 1.0 times less risky than Gladstone Investment. It trades about 0.31 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.16 per unit of risk. If you would invest 890.00 in Sumitomo Rubber Industries on September 4, 2024 and sell it today you would earn a total of 120.00 from holding Sumitomo Rubber Industries or generate 13.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Gladstone Investment
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Gladstone Investment |
Sumitomo Rubber and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Gladstone Investment
The main advantage of trading using opposite Sumitomo Rubber and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.| Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Semperit Aktiengesellschaft Holding | Sumitomo Rubber vs. PT Gajah Tunggal |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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