Correlation Between Sumitomo Mitsui and WIMFARM SA
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and WIMFARM SA 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 WIMFARM SA 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 WIMFARM SA EO, you can compare the effects of market volatilities on Sumitomo Mitsui and WIMFARM SA 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 WIMFARM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and WIMFARM SA.
Diversification Opportunities for Sumitomo Mitsui and WIMFARM SA
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and WIMFARM is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO 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 WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and WIMFARM SA go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and WIMFARM SA
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.43 times more return on investment than WIMFARM SA. However, Sumitomo Mitsui Construction is 2.35 times less risky than WIMFARM SA. It trades about -0.02 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about -0.07 per unit of risk. If you would invest 284.00 in Sumitomo Mitsui Construction on August 28, 2024 and sell it today you would lose (56.00) from holding Sumitomo Mitsui Construction or give up 19.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. WIMFARM SA EO
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| WIMFARM SA EO |
Sumitomo Mitsui and WIMFARM SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and WIMFARM SA
The main advantage of trading using opposite Sumitomo Mitsui and WIMFARM SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, WIMFARM SA 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 WIMFARM SA will offset losses from the drop in WIMFARM SA's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Microsoft |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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