Correlation Between Sumitomo Rubber and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Retail Estates 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 Retail Estates 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 Retail Estates NV, you can compare the effects of market volatilities on Sumitomo Rubber and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Retail Estates.
Diversification Opportunities for Sumitomo Rubber and Retail Estates
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sumitomo and Retail is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Retail Estates go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Retail Estates
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.47 times more return on investment than Retail Estates. However, Sumitomo Rubber is 1.47 times more volatile than Retail Estates NV. It trades about 0.06 of its potential returns per unit of risk. Retail Estates NV is currently generating about 0.01 per unit of risk. If you would invest 1,070 in Sumitomo Rubber Industries on November 30, 2024 and sell it today you would earn a total of 40.00 from holding Sumitomo Rubber Industries or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. Retail Estates NV
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Retail Estates NV |
Sumitomo Rubber and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Retail Estates
The main advantage of trading using opposite Sumitomo Rubber and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| Sumitomo Rubber vs. NAGOYA RAILROAD | Sumitomo Rubber vs. Brockhaus Capital Management | Sumitomo Rubber vs. Television Broadcasts Limited | Sumitomo Rubber vs. QUEEN S ROAD |
| Retail Estates vs. Brockhaus Capital Management | Retail Estates vs. Perdoceo Education | Retail Estates vs. Salesforce | Retail Estates vs. TRADEGATE |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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