Correlation Between Sumitomo Rubber and LIFEWAY FOODS
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and LIFEWAY FOODS 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 LIFEWAY FOODS 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 LIFEWAY FOODS, you can compare the effects of market volatilities on Sumitomo Rubber and LIFEWAY FOODS 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 LIFEWAY FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and LIFEWAY FOODS.
Diversification Opportunities for Sumitomo Rubber and LIFEWAY FOODS
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sumitomo and LIFEWAY is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY FOODS 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 LIFEWAY FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFEWAY FOODS has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and LIFEWAY FOODS go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and LIFEWAY FOODS
Assuming the 90 days horizon Sumitomo Rubber is expected to generate 1.28 times less return on investment than LIFEWAY FOODS. In addition to that, Sumitomo Rubber is 1.05 times more volatile than LIFEWAY FOODS. It trades about 0.05 of its total potential returns per unit of risk. LIFEWAY FOODS is currently generating about 0.07 per unit of volatility. If you would invest 605.00 in LIFEWAY FOODS on September 2, 2024 and sell it today you would earn a total of 1,675 from holding LIFEWAY FOODS or generate 276.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. LIFEWAY FOODS
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| LIFEWAY FOODS |
Sumitomo Rubber and LIFEWAY FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and LIFEWAY FOODS
The main advantage of trading using opposite Sumitomo Rubber and LIFEWAY FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, LIFEWAY FOODS 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 LIFEWAY FOODS will offset losses from the drop in LIFEWAY FOODS's long position.| Sumitomo Rubber vs. Bridgestone | Sumitomo Rubber vs. The Goodyear Tire | Sumitomo Rubber vs. Zeon Corporation |
| LIFEWAY FOODS vs. SIVERS SEMICONDUCTORS AB | LIFEWAY FOODS vs. Darden Restaurants | LIFEWAY FOODS vs. Reliance Steel Aluminum | LIFEWAY FOODS vs. Q2M Managementberatung AG |
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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