Correlation Between Sumitomo Mitsui and LTC Properties
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and LTC Properties 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 LTC Properties 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 LTC Properties, you can compare the effects of market volatilities on Sumitomo Mitsui and LTC Properties 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 LTC Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and LTC Properties.
Diversification Opportunities for Sumitomo Mitsui and LTC Properties
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and LTC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and LTC Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTC Properties 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 LTC Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LTC Properties has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and LTC Properties go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and LTC Properties
Assuming the 90 days horizon Sumitomo Mitsui is expected to generate 2.25 times less return on investment than LTC Properties. In addition to that, Sumitomo Mitsui is 1.19 times more volatile than LTC Properties. It trades about 0.02 of its total potential returns per unit of risk. LTC Properties is currently generating about 0.06 per unit of volatility. If you would invest 2,752 in LTC Properties on September 12, 2024 and sell it today you would earn a total of 810.00 from holding LTC Properties or generate 29.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. LTC Properties
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| LTC Properties |
Sumitomo Mitsui and LTC Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and LTC Properties
The main advantage of trading using opposite Sumitomo Mitsui and LTC Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, LTC Properties 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 LTC Properties will offset losses from the drop in LTC Properties' long position.| Sumitomo Mitsui vs. GUARDANT HEALTH CL | Sumitomo Mitsui vs. STMICROELECTRONICS | Sumitomo Mitsui vs. Methode Electronics | Sumitomo Mitsui vs. ELECTRONIC ARTS |
| LTC Properties vs. GLG LIFE TECH | LTC Properties vs. Global Ship Lease | LTC Properties vs. Motorcar Parts of | LTC Properties vs. CarsalesCom |
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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