Correlation Between Sumitomo Rubber and Mitsubishi Materials
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Mitsubishi Materials 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 Mitsubishi Materials 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 Mitsubishi Materials, you can compare the effects of market volatilities on Sumitomo Rubber and Mitsubishi Materials 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 Mitsubishi Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Mitsubishi Materials.
Diversification Opportunities for Sumitomo Rubber and Mitsubishi Materials
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Mitsubishi is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Mitsubishi Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Materials 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 Mitsubishi Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Materials has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Mitsubishi Materials go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Mitsubishi Materials
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 3.63 times more return on investment than Mitsubishi Materials. However, Sumitomo Rubber is 3.63 times more volatile than Mitsubishi Materials. It trades about 0.06 of its potential returns per unit of risk. Mitsubishi Materials is currently generating about 0.01 per unit of risk. If you would invest 361.00 in Sumitomo Rubber Industries on August 26, 2024 and sell it today you would earn a total of 689.00 from holding Sumitomo Rubber Industries or generate 190.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Mitsubishi Materials
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Mitsubishi Materials |
Sumitomo Rubber and Mitsubishi Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Mitsubishi Materials
The main advantage of trading using opposite Sumitomo Rubber and Mitsubishi Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Mitsubishi Materials 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 Mitsubishi Materials will offset losses from the drop in Mitsubishi Materials' long position.| Sumitomo Rubber vs. Bridgestone | Sumitomo Rubber vs. Advanced Drainage Systems | Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Polyplex Public |
| Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |