Correlation Between Sumitomo Rubber and Dollar General
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Dollar General 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 Dollar General 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 Dollar General, you can compare the effects of market volatilities on Sumitomo Rubber and Dollar General 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 Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Dollar General.
Diversification Opportunities for Sumitomo Rubber and Dollar General
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Dollar is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General 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 Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Dollar General go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Dollar General
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 0.58 times more return on investment than Dollar General. However, Sumitomo Rubber Industries is 1.71 times less risky than Dollar General. It trades about 0.22 of its potential returns per unit of risk. Dollar General is currently generating about 0.09 per unit of risk. If you would invest 1,010 in Sumitomo Rubber Industries on September 15, 2024 and sell it today you would earn a total of 70.00 from holding Sumitomo Rubber Industries or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Dollar General
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Dollar General |
Sumitomo Rubber and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Dollar General
The main advantage of trading using opposite Sumitomo Rubber and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Dollar General 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 Dollar General will offset losses from the drop in Dollar General's long position.| Sumitomo Rubber vs. Superior Plus Corp | Sumitomo Rubber vs. NMI Holdings | Sumitomo Rubber vs. SIVERS SEMICONDUCTORS AB | Sumitomo Rubber vs. NorAm Drilling AS |
| Dollar General vs. Sumitomo Rubber Industries | Dollar General vs. Astral Foods Limited | Dollar General vs. Lifeway Foods | Dollar General vs. PREMIER FOODS |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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