Correlation Between Grupo Bimbo and Sumitomo
Can any of the company-specific risk be diversified away by investing in both Grupo Bimbo and Sumitomo 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 Grupo Bimbo and Sumitomo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Bimbo SAB and Sumitomo, you can compare the effects of market volatilities on Grupo Bimbo 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 Grupo Bimbo with a short position of Sumitomo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Bimbo and Sumitomo.
Diversification Opportunities for Grupo Bimbo and Sumitomo
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and Sumitomo is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Sumitomo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo and Grupo Bimbo 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 Grupo Bimbo SAB 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 Grupo Bimbo i.e., Grupo Bimbo and Sumitomo go up and down completely randomly.
Pair Corralation between Grupo Bimbo and Sumitomo
Assuming the 90 days horizon Grupo Bimbo SAB is expected to under-perform the Sumitomo. In addition to that, Grupo Bimbo is 1.17 times more volatile than Sumitomo. It trades about -0.19 of its total potential returns per unit of risk. Sumitomo is currently generating about 0.17 per unit of volatility. If you would invest 2,045 in Sumitomo on September 12, 2024 and sell it today you would earn a total of 165.00 from holding Sumitomo or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Grupo Bimbo SAB vs. Sumitomo
Performance |
| Timeline |
| Grupo Bimbo SAB |
| Sumitomo |
Grupo Bimbo and Sumitomo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Bimbo and Sumitomo
The main advantage of trading using opposite Grupo Bimbo and Sumitomo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Bimbo 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.| Grupo Bimbo vs. High Liner Foods | Grupo Bimbo vs. Lamb Weston Holdings | Grupo Bimbo vs. Kellanova | Grupo Bimbo vs. J J Snack |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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