Correlation Between Sumitomo Mitsui and McDonalds
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and McDonalds 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 McDonalds 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 McDonalds, you can compare the effects of market volatilities on Sumitomo Mitsui and McDonalds 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 McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and McDonalds.
Diversification Opportunities for Sumitomo Mitsui and McDonalds
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sumitomo and McDonalds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds 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 McDonalds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and McDonalds go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and McDonalds
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 1.54 times more return on investment than McDonalds. However, Sumitomo Mitsui is 1.54 times more volatile than McDonalds. It trades about 0.02 of its potential returns per unit of risk. McDonalds is currently generating about 0.03 per unit of risk. If you would invest 228.00 in Sumitomo Mitsui Construction on September 12, 2024 and sell it today you would earn a total of 22.00 from holding Sumitomo Mitsui Construction or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. McDonalds
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| McDonalds |
Sumitomo Mitsui and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and McDonalds
The main advantage of trading using opposite Sumitomo Mitsui and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, McDonalds 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 McDonalds will offset losses from the drop in McDonalds' long position.| Sumitomo Mitsui vs. GUARDANT HEALTH CL | Sumitomo Mitsui vs. STMICROELECTRONICS | Sumitomo Mitsui vs. Methode Electronics | Sumitomo Mitsui vs. ELECTRONIC ARTS |
| McDonalds vs. VIRGIN WINES UK | McDonalds vs. Titan Machinery | McDonalds vs. Dairy Farm International | McDonalds vs. Sumitomo Mitsui Construction |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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