Correlation Between Bridgestone and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both Bridgestone and Sumitomo Rubber 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 Bridgestone and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgestone and Sumitomo Rubber Industries, you can compare the effects of market volatilities on Bridgestone and Sumitomo Rubber 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 Bridgestone with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgestone and Sumitomo Rubber.
Diversification Opportunities for Bridgestone and Sumitomo Rubber
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bridgestone and Sumitomo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bridgestone and Sumitomo Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Rubber Indu and Bridgestone 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 Bridgestone are associated (or correlated) with Sumitomo Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Rubber Indu has no effect on the direction of Bridgestone i.e., Bridgestone and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between Bridgestone and Sumitomo Rubber
Assuming the 90 days horizon Bridgestone is expected to under-perform the Sumitomo Rubber. But the stock apears to be less risky and, when comparing its historical volatility, Bridgestone is 1.26 times less risky than Sumitomo Rubber. The stock trades about 0.0 of its potential returns per unit of risk. The Sumitomo Rubber Industries is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 905.00 in Sumitomo Rubber Industries on August 29, 2024 and sell it today you would earn a total of 135.00 from holding Sumitomo Rubber Industries or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgestone vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| Bridgestone |
| Sumitomo Rubber Indu |
Bridgestone and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgestone and Sumitomo Rubber
The main advantage of trading using opposite Bridgestone and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgestone position performs unexpectedly, Sumitomo Rubber 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 Rubber will offset losses from the drop in Sumitomo Rubber's long position.| Bridgestone vs. Advanced Drainage Systems | Bridgestone vs. Zeon Corporation | Bridgestone vs. Polyplex Public |
| Sumitomo Rubber vs. Advanced Drainage Systems | Sumitomo Rubber vs. Zeon Corporation | Sumitomo Rubber vs. Polyplex Public |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance |