Correlation Between Automatic Data and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Sumitomo Mitsui 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 Automatic Data and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Automatic Data and Sumitomo Mitsui 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 Automatic Data with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Sumitomo Mitsui.
Diversification Opportunities for Automatic Data and Sumitomo Mitsui
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Automatic and Sumitomo is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial and Automatic Data 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 Automatic Data Processing are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Automatic Data i.e., Automatic Data and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Automatic Data and Sumitomo Mitsui
Assuming the 90 days trading horizon Automatic Data is expected to generate 3.11 times less return on investment than Sumitomo Mitsui. But when comparing it to its historical volatility, Automatic Data Processing is 1.3 times less risky than Sumitomo Mitsui. It trades about 0.05 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,520 in Sumitomo Mitsui Financial on September 3, 2024 and sell it today you would earn a total of 5,714 from holding Sumitomo Mitsui Financial or generate 162.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.7% |
| Values | Daily Returns |
Automatic Data Processing vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Automatic Data Processing |
| Sumitomo Mitsui Financial |
Automatic Data and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Sumitomo Mitsui
The main advantage of trading using opposite Automatic Data and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Automatic Data vs. Fundo Investimento Imobiliario | Automatic Data vs. Fras le SA | Automatic Data vs. Western Digital | Automatic Data vs. Clave Indices De |
| Sumitomo Mitsui vs. Fundo Investimento Imobiliario | Sumitomo Mitsui vs. Fras le SA | Sumitomo Mitsui vs. Western Digital | Sumitomo Mitsui vs. Clave Indices De |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |