Correlation Between Sumitomo Rubber and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and COSTCO WHOLESALE 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 COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on Sumitomo Rubber and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and COSTCO WHOLESALE.
Diversification Opportunities for Sumitomo Rubber and COSTCO WHOLESALE
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and COSTCO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and COSTCO WHOLESALE
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.07 times more return on investment than COSTCO WHOLESALE. However, Sumitomo Rubber is 1.07 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.31 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.28 per unit of risk. If you would invest 890.00 in Sumitomo Rubber Industries on September 3, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| COSTCO WHOLESALE CDR |
Sumitomo Rubber and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and COSTCO WHOLESALE
The main advantage of trading using opposite Sumitomo Rubber and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, COSTCO WHOLESALE 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 COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.| Sumitomo Rubber vs. COFCO Joycome Foods | Sumitomo Rubber vs. GAMESTOP | Sumitomo Rubber vs. MOLSON RS BEVERAGE | Sumitomo Rubber vs. Tyson Foods |
| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Superior Plus Corp | COSTCO WHOLESALE vs. NMI Holdings | COSTCO WHOLESALE vs. Origin Agritech |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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