Correlation Between Sumitomo Rubber and Bridgestone
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Bridgestone 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 Bridgestone 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 Bridgestone, you can compare the effects of market volatilities on Sumitomo Rubber and Bridgestone 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 Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Bridgestone.
Diversification Opportunities for Sumitomo Rubber and Bridgestone
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Bridgestone is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone 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 Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Bridgestone go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Bridgestone
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.6 times more return on investment than Bridgestone. However, Sumitomo Rubber is 1.6 times more volatile than Bridgestone. It trades about 0.03 of its potential returns per unit of risk. Bridgestone is currently generating about -0.01 per unit of risk. If you would invest 940.00 in Sumitomo Rubber Industries on August 25, 2024 and sell it today you would earn a total of 110.00 from holding Sumitomo Rubber Industries or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Bridgestone
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Bridgestone |
Sumitomo Rubber and Bridgestone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Bridgestone
The main advantage of trading using opposite Sumitomo Rubber and Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Bridgestone 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 Bridgestone will offset losses from the drop in Bridgestone's long position.| Sumitomo Rubber vs. Bridgestone | Sumitomo Rubber vs. Advanced Drainage Systems | Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Polyplex Public |
| Bridgestone vs. Advanced Drainage Systems | Bridgestone vs. Sumitomo Rubber Industries | Bridgestone vs. Zeon Corporation | Bridgestone vs. Polyplex Public |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |