Correlation Between DAX Index and Sumitomo
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By analyzing existing cross correlation between DAX Index and Sumitomo, you can compare the effects of market volatilities on DAX Index and Sumitomo 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 DAX Index with a short position of Sumitomo. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Sumitomo.
Diversification Opportunities for DAX Index and Sumitomo
Very good diversification
The 3 months correlation between DAX and Sumitomo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Sumitomo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo and DAX Index 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 DAX Index are associated (or correlated) with Sumitomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo has no effect on the direction of DAX Index i.e., DAX Index and Sumitomo go up and down completely randomly.
Pair Corralation between DAX Index and Sumitomo
Assuming the 90 days trading horizon DAX Index is expected to under-perform the Sumitomo. But the index apears to be less risky and, when comparing its historical volatility, DAX Index is 2.63 times less risky than Sumitomo. The index trades about -0.03 of its potential returns per unit of risk. The Sumitomo is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,932 in Sumitomo on August 25, 2024 and sell it today you would earn a total of 60.00 from holding Sumitomo or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Sumitomo
Performance |
| Timeline |
DAX Index and Sumitomo Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Sumitomo
Pair trading matchups for Sumitomo
Pair Trading with DAX Index and Sumitomo
The main advantage of trading using opposite DAX Index and Sumitomo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Sumitomo 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 will offset losses from the drop in Sumitomo's long position.| DAX Index vs. Granite Construction | DAX Index vs. AGRICULTBK HADR25 YC | DAX Index vs. ADRIATIC METALS LS 013355 | DAX Index vs. GREENX METALS LTD |
| Sumitomo vs. UNITED RENTALS | Sumitomo vs. Adtalem Global Education | Sumitomo vs. EEDUCATION ALBERT AB | Sumitomo vs. Perdoceo Education |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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