Correlation Between Gold Fields and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Gold Fields 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 Gold Fields and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields Limited and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Gold Fields 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 Gold Fields with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Sumitomo Mitsui.
Diversification Opportunities for Gold Fields and Sumitomo Mitsui
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gold and Sumitomo is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Limited 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 Gold Fields 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 Gold Fields Limited 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 Gold Fields i.e., Gold Fields and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Gold Fields and Sumitomo Mitsui
Assuming the 90 days trading horizon Gold Fields is expected to generate 1.99 times less return on investment than Sumitomo Mitsui. But when comparing it to its historical volatility, Gold Fields Limited is 1.07 times less risky than Sumitomo Mitsui. It trades about 0.08 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 7,992 in Sumitomo Mitsui Financial on October 22, 2024 and sell it today you would earn a total of 954.00 from holding Sumitomo Mitsui Financial or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Limited vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Gold Fields Limited |
| Sumitomo Mitsui Financial |
Gold Fields and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Sumitomo Mitsui
The main advantage of trading using opposite Gold Fields and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields 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.| Gold Fields vs. Metalurgica Gerdau SA | Gold Fields vs. Eastman Chemical | Gold Fields vs. Extra Space Storage | Gold Fields vs. New Oriental Education |
| Sumitomo Mitsui vs. Eastman Chemical | Sumitomo Mitsui vs. Healthpeak Properties | Sumitomo Mitsui vs. Extra Space Storage | Sumitomo Mitsui vs. Hospital Mater Dei |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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