Correlation Between Sumitomo Mitsui and United Rentals
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and United Rentals 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 United Rentals 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 United Rentals, you can compare the effects of market volatilities on Sumitomo Mitsui and United Rentals 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 United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and United Rentals.
Diversification Opportunities for Sumitomo Mitsui and United Rentals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and United is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and United Rentals go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and United Rentals
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.89 times more return on investment than United Rentals. However, Sumitomo Mitsui Construction is 1.12 times less risky than United Rentals. It trades about 0.06 of its potential returns per unit of risk. United Rentals is currently generating about -0.1 per unit of risk. If you would invest 242.00 in Sumitomo Mitsui Construction on October 30, 2024 and sell it today you would earn a total of 8.00 from holding Sumitomo Mitsui Construction or generate 3.31% 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. United Rentals
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| United Rentals |
Sumitomo Mitsui and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and United Rentals
The main advantage of trading using opposite Sumitomo Mitsui and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| Sumitomo Mitsui vs. US FOODS HOLDING | Sumitomo Mitsui vs. CHEMICAL INDUSTRIES | Sumitomo Mitsui vs. China BlueChemical | Sumitomo Mitsui vs. United Natural Foods |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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