Correlation Between WIMFARM SA and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both WIMFARM SA and Sumitomo Mitsui 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 WIMFARM SA and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WIMFARM SA EO and Sumitomo Mitsui Construction, you can compare the effects of market volatilities on WIMFARM SA and Sumitomo Mitsui 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 WIMFARM SA with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and Sumitomo Mitsui.
Diversification Opportunities for WIMFARM SA and Sumitomo Mitsui
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WIMFARM and Sumitomo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and Sumitomo Mitsui Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Cons and WIMFARM SA 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 WIMFARM SA EO are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Cons has no effect on the direction of WIMFARM SA i.e., WIMFARM SA and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between WIMFARM SA and Sumitomo Mitsui
Assuming the 90 days horizon WIMFARM SA EO is expected to under-perform the Sumitomo Mitsui. In addition to that, WIMFARM SA is 2.6 times more volatile than Sumitomo Mitsui Construction. It trades about -0.02 of its total potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about -0.01 per unit of volatility. If you would invest 238.00 in Sumitomo Mitsui Construction on August 24, 2024 and sell it today you would lose (20.00) from holding Sumitomo Mitsui Construction or give up 8.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WIMFARM SA EO vs. Sumitomo Mitsui Construction
Performance |
| Timeline |
| WIMFARM SA EO |
| Sumitomo Mitsui Cons |
WIMFARM SA and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WIMFARM SA and Sumitomo Mitsui
The main advantage of trading using opposite WIMFARM SA and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIMFARM SA position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| WIMFARM SA vs. AB Volvo | WIMFARM SA vs. Superior Plus Corp | WIMFARM SA vs. NMI Holdings | WIMFARM SA vs. Origin Agritech |
| Sumitomo Mitsui vs. Goosehead Insurance | Sumitomo Mitsui vs. MCEWEN MINING INC | Sumitomo Mitsui vs. United Insurance Holdings | Sumitomo Mitsui vs. Safety Insurance Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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