Correlation Between Sumitomo Rubber and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Daimler Truck 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 Daimler Truck 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 Daimler Truck Holding, you can compare the effects of market volatilities on Sumitomo Rubber and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Daimler Truck.
Diversification Opportunities for Sumitomo Rubber and Daimler Truck
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Daimler is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Daimler Truck go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Daimler Truck
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 3.69 times more return on investment than Daimler Truck. However, Sumitomo Rubber is 3.69 times more volatile than Daimler Truck Holding. It trades about 0.06 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.05 per unit of risk. If you would invest 342.00 in Sumitomo Rubber Industries on October 11, 2024 and sell it today you would earn a total of 708.00 from holding Sumitomo Rubber Industries or generate 207.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Daimler Truck Holding
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Daimler Truck Holding |
Sumitomo Rubber and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Daimler Truck
The main advantage of trading using opposite Sumitomo Rubber and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck's long position.| Sumitomo Rubber vs. alstria office REIT AG | Sumitomo Rubber vs. Broadridge Financial Solutions | Sumitomo Rubber vs. CENTURIA OFFICE REIT | Sumitomo Rubber vs. Gaztransport Technigaz SA |
| Daimler Truck vs. Addus HomeCare | Daimler Truck vs. Beazer Homes USA | Daimler Truck vs. GLOBUS MEDICAL A | Daimler Truck vs. PULSION Medical Systems |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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