Correlation Between Sumitomo Mitsui and Inspire Medical
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Inspire Medical 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 Mitsui and Inspire Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Construction and Inspire Medical Systems, you can compare the effects of market volatilities on Sumitomo Mitsui and Inspire Medical 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 Mitsui with a short position of Inspire Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Inspire Medical.
Diversification Opportunities for Sumitomo Mitsui and Inspire Medical
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and Inspire is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems and Sumitomo Mitsui 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 Mitsui Construction are associated (or correlated) with Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Inspire Medical go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Inspire Medical
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to under-perform the Inspire Medical. But the stock apears to be less risky and, when comparing its historical volatility, Sumitomo Mitsui Construction is 2.37 times less risky than Inspire Medical. The stock trades about -0.01 of its potential returns per unit of risk. The Inspire Medical Systems is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 23,050 in Inspire Medical Systems on October 11, 2024 and sell it today you would lose (3,725) from holding Inspire Medical Systems or give up 16.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. Inspire Medical Systems
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Inspire Medical Systems |
Sumitomo Mitsui and Inspire Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Inspire Medical
The main advantage of trading using opposite Sumitomo Mitsui and Inspire Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Inspire Medical 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 Inspire Medical will offset losses from the drop in Inspire Medical's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc |
| Inspire Medical vs. Daito Trust Construction | Inspire Medical vs. SALESFORCE INC CDR | Inspire Medical vs. Sumitomo Mitsui Construction | Inspire Medical vs. Chongqing Machinery Electric |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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