Correlation Between Sumitomo Mitsui and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Selective Insurance 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 Selective Insurance 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 Selective Insurance Group, you can compare the effects of market volatilities on Sumitomo Mitsui and Selective Insurance 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 Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Selective Insurance.
Diversification Opportunities for Sumitomo Mitsui and Selective Insurance
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sumitomo and Selective is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance 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 Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Selective Insurance go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Selective Insurance
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.77 times more return on investment than Selective Insurance. However, Sumitomo Mitsui Construction is 1.31 times less risky than Selective Insurance. It trades about 0.11 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.04 per unit of risk. If you would invest 230.00 in Sumitomo Mitsui Construction on October 26, 2024 and sell it today you would earn a total of 18.00 from holding Sumitomo Mitsui Construction or generate 7.83% 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. Selective Insurance Group
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Selective Insurance |
Sumitomo Mitsui and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Selective Insurance
The main advantage of trading using opposite Sumitomo Mitsui and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Selective Insurance 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 Selective Insurance will offset losses from the drop in Selective Insurance's long position.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc |
| Selective Insurance vs. Spirent Communications plc | Selective Insurance vs. Sumitomo Mitsui Construction | Selective Insurance vs. AGRICULTBK HADR25 YC | Selective Insurance vs. ALEFARM BREWING DK 05 |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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