Correlation Between Sumitomo Mitsui and GameStop Corp
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and GameStop Corp 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 GameStop Corp 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 GameStop Corp, you can compare the effects of market volatilities on Sumitomo Mitsui and GameStop Corp 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 GameStop Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and GameStop Corp.
Diversification Opportunities for Sumitomo Mitsui and GameStop Corp
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sumitomo and GameStop is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp 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 GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and GameStop Corp go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and GameStop Corp
Assuming the 90 days horizon Sumitomo Mitsui is expected to generate 60.59 times less return on investment than GameStop Corp. But when comparing it to its historical volatility, Sumitomo Mitsui Construction is 5.74 times less risky than GameStop Corp. It trades about 0.01 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,528 in GameStop Corp on October 16, 2024 and sell it today you would earn a total of 1,607 from holding GameStop Corp or generate 105.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. GameStop Corp
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| GameStop Corp |
Sumitomo Mitsui and GameStop Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and GameStop Corp
The main advantage of trading using opposite Sumitomo Mitsui and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, GameStop Corp 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 GameStop Corp will offset losses from the drop in GameStop Corp's long position.| Sumitomo Mitsui vs. EEDUCATION ALBERT AB | Sumitomo Mitsui vs. STRAYER EDUCATION | Sumitomo Mitsui vs. CAREER EDUCATION | Sumitomo Mitsui vs. SLR Investment Corp |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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