Correlation Between Sumitomo Rubber and Aluminum
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Aluminum 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 Aluminum 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 Aluminum of, you can compare the effects of market volatilities on Sumitomo Rubber and Aluminum 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 Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Aluminum.
Diversification Opportunities for Sumitomo Rubber and Aluminum
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sumitomo and Aluminum is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum 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 Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Aluminum go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Aluminum
Assuming the 90 days horizon Sumitomo Rubber is expected to generate 119.64 times less return on investment than Aluminum. But when comparing it to its historical volatility, Sumitomo Rubber Industries is 2.84 times less risky than Aluminum. It trades about 0.01 of its potential returns per unit of risk. Aluminum of is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Aluminum of on October 28, 2024 and sell it today you would earn a total of 8.00 from holding Aluminum of or generate 14.55% 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. Aluminum of
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Aluminum |
Sumitomo Rubber and Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Aluminum
The main advantage of trading using opposite Sumitomo Rubber and Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Aluminum 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 Aluminum will offset losses from the drop in Aluminum's long position.| Sumitomo Rubber vs. AFFLUENT MEDICAL SAS | Sumitomo Rubber vs. TRADEDOUBLER AB SK | Sumitomo Rubber vs. Fast Retailing Co | Sumitomo Rubber vs. H2O Retailing |
| Aluminum vs. ARDAGH METAL PACDL 0001 | Aluminum vs. SERI INDUSTRIAL EO | Aluminum vs. LOANDEPOT INC A | Aluminum vs. Global Ship Lease |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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