Correlation Between Sumitomo Rubber and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on Sumitomo Rubber and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Micron Technology.
Diversification Opportunities for Sumitomo Rubber and Micron Technology
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sumitomo and Micron is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Micron Technology go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Micron Technology
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 0.54 times more return on investment than Micron Technology. However, Sumitomo Rubber Industries is 1.86 times less risky than Micron Technology. It trades about 0.1 of its potential returns per unit of risk. Micron Technology is currently generating about 0.0 per unit of risk. If you would invest 1,020 in Sumitomo Rubber Industries on September 13, 2024 and sell it today you would earn a total of 30.00 from holding Sumitomo Rubber Industries or generate 2.94% 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. Micron Technology
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Micron Technology |
Sumitomo Rubber and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Micron Technology
The main advantage of trading using opposite Sumitomo Rubber and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Sumitomo Rubber vs. Superior Plus Corp | Sumitomo Rubber vs. NMI Holdings | Sumitomo Rubber vs. SIVERS SEMICONDUCTORS AB | Sumitomo Rubber vs. NorAm Drilling AS |
| Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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