Correlation Between Sumitomo Rubber and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on Sumitomo Rubber and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and SLR Investment.
Diversification Opportunities for Sumitomo Rubber and SLR Investment
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and SLR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and SLR Investment go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and SLR Investment
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.08 times more return on investment than SLR Investment. However, Sumitomo Rubber is 1.08 times more volatile than SLR Investment Corp. It trades about 0.31 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.31 per unit of risk. If you would invest 890.00 in Sumitomo Rubber Industries on September 4, 2024 and sell it today you would earn a total of 120.00 from holding Sumitomo Rubber Industries or generate 13.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. SLR Investment Corp
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| SLR Investment Corp |
Sumitomo Rubber and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and SLR Investment
The main advantage of trading using opposite Sumitomo Rubber and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Semperit Aktiengesellschaft Holding | Sumitomo Rubber vs. PT Gajah Tunggal |
| SLR Investment vs. Blackstone Group | SLR Investment vs. BlackRock | SLR Investment vs. The Bank of | SLR Investment vs. Ameriprise Financial |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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