Correlation Between Banco Bilbao and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao 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 Banco Bilbao and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bilbao Vizcaya and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Banco Bilbao 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 Banco Bilbao with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Sumitomo Mitsui.
Diversification Opportunities for Banco Bilbao and Sumitomo Mitsui
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Sumitomo is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Vizcaya 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 Banco Bilbao 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 Banco Bilbao Vizcaya 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 Banco Bilbao i.e., Banco Bilbao and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Banco Bilbao and Sumitomo Mitsui
Assuming the 90 days horizon Banco Bilbao is expected to generate 4.16 times less return on investment than Sumitomo Mitsui. But when comparing it to its historical volatility, Banco Bilbao Vizcaya is 1.42 times less risky than Sumitomo Mitsui. It trades about 0.03 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,340 in Sumitomo Mitsui Financial on September 14, 2024 and sell it today you would earn a total of 1,250 from holding Sumitomo Mitsui Financial or generate 93.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.48% |
| Values | Daily Returns |
Banco Bilbao Vizcaya vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Banco Bilbao Vizcaya |
| Sumitomo Mitsui Financial |
Banco Bilbao and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bilbao and Sumitomo Mitsui
The main advantage of trading using opposite Banco Bilbao and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao 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.| Banco Bilbao vs. Bank of America | Banco Bilbao vs. Barclays PLC | Banco Bilbao vs. Bank of America | Banco Bilbao vs. ABN AMRO Bank |
| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. HSBC Holdings PLC | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. Citigroup |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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