Correlation Between Edison Cobalt and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Edison Cobalt and Sumitomo Metal 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 Edison Cobalt and Sumitomo Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edison Cobalt Corp and Sumitomo Metal Mining, you can compare the effects of market volatilities on Edison Cobalt and Sumitomo Metal 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 Edison Cobalt with a short position of Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edison Cobalt and Sumitomo Metal.
Diversification Opportunities for Edison Cobalt and Sumitomo Metal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Edison and Sumitomo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Edison Cobalt Corp and Sumitomo Metal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Metal Mining and Edison Cobalt 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 Edison Cobalt Corp are associated (or correlated) with Sumitomo Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Metal Mining has no effect on the direction of Edison Cobalt i.e., Edison Cobalt and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Edison Cobalt and Sumitomo Metal
Assuming the 90 days horizon Edison Cobalt Corp is expected to generate 21.25 times more return on investment than Sumitomo Metal. However, Edison Cobalt is 21.25 times more volatile than Sumitomo Metal Mining. It trades about 0.04 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.02 per unit of risk. If you would invest 32.00 in Edison Cobalt Corp on August 30, 2024 and sell it today you would lose (25.55) from holding Edison Cobalt Corp or give up 79.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edison Cobalt Corp vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Edison Cobalt Corp |
| Sumitomo Metal Mining |
Edison Cobalt and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edison Cobalt and Sumitomo Metal
The main advantage of trading using opposite Edison Cobalt and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edison Cobalt position performs unexpectedly, Sumitomo Metal 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 Metal will offset losses from the drop in Sumitomo Metal's long position.| Edison Cobalt vs. Rockridge Resources | Edison Cobalt vs. Ameriwest Lithium | Edison Cobalt vs. Osisko Metals Incorporated | Edison Cobalt vs. Volt Lithium Corp |
| Sumitomo Metal vs. Rockridge Resources | Sumitomo Metal vs. Ameriwest Lithium | Sumitomo Metal vs. Osisko Metals Incorporated | Sumitomo Metal vs. Volt Lithium Corp |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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