Correlation Between Sumitomo Rubber and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and Clean Energy 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 Clean Energy 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 Clean Energy Fuels, you can compare the effects of market volatilities on Sumitomo Rubber and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and Clean Energy.
Diversification Opportunities for Sumitomo Rubber and Clean Energy
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sumitomo and Clean is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and Clean Energy go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and Clean Energy
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.58 times more return on investment than Clean Energy. However, Sumitomo Rubber is 1.58 times more volatile than Clean Energy Fuels. It trades about 0.06 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.01 per unit of risk. If you would invest 342.00 in Sumitomo Rubber Industries on October 13, 2024 and sell it today you would earn a total of 718.00 from holding Sumitomo Rubber Industries or generate 209.94% 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. Clean Energy Fuels
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| Clean Energy Fuels |
Sumitomo Rubber and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and Clean Energy
The main advantage of trading using opposite Sumitomo Rubber and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| Sumitomo Rubber vs. Superior Plus Corp | Sumitomo Rubber vs. NMI Holdings | Sumitomo Rubber vs. SIVERS SEMICONDUCTORS AB | Sumitomo Rubber vs. Talanx AG |
| Clean Energy vs. UPDATE SOFTWARE | Clean Energy vs. Goosehead Insurance | Clean Energy vs. Vishay Intertechnology | Clean Energy vs. INSURANCE AUST GRP |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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