Correlation Between Fast Retailing and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both Fast Retailing 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 Fast Retailing and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and Sumitomo Rubber Industries, you can compare the effects of market volatilities on Fast Retailing 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 Fast Retailing with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Sumitomo Rubber.
Diversification Opportunities for Fast Retailing and Sumitomo Rubber
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fast and Sumitomo is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co 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 Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between Fast Retailing and Sumitomo Rubber
Assuming the 90 days trading horizon Fast Retailing is expected to generate 13.95 times less return on investment than Sumitomo Rubber. In addition to that, Fast Retailing is 1.35 times more volatile than Sumitomo Rubber Industries. It trades about 0.01 of its total potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about 0.22 per unit of volatility. If you would invest 1,050 in Sumitomo Rubber Industries on November 6, 2024 and sell it today you would earn a total of 60.00 from holding Sumitomo Rubber Industries or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| Fast Retailing |
| Sumitomo Rubber Indu |
Fast Retailing and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Sumitomo Rubber
The main advantage of trading using opposite Fast Retailing and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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.| Fast Retailing vs. AEON METALS LTD | Fast Retailing vs. IDP EDUCATION LTD | Fast Retailing vs. SIERRA METALS | Fast Retailing vs. Adtalem Global Education |
| Sumitomo Rubber vs. Semiconductor Manufacturing International | Sumitomo Rubber vs. De Grey Mining | Sumitomo Rubber vs. Nordic Semiconductor ASA | Sumitomo Rubber vs. STGEORGE MINING LTD |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |