Correlation Between ING Group and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both ING Group 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 ING Group and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Group NV and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on ING Group 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 ING Group with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Group and Sumitomo Mitsui.
Diversification Opportunities for ING Group and Sumitomo Mitsui
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ING and Sumitomo is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ING Group NV 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 ING Group 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 ING Group NV 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 ING Group i.e., ING Group and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between ING Group and Sumitomo Mitsui
Considering the 90-day investment horizon ING Group is expected to generate 1.83 times less return on investment than Sumitomo Mitsui. But when comparing it to its historical volatility, ING Group NV is 1.16 times less risky than Sumitomo Mitsui. It trades about 0.06 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 647.00 in Sumitomo Mitsui Financial on August 23, 2024 and sell it today you would earn a total of 750.00 from holding Sumitomo Mitsui Financial or generate 115.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Group NV vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| ING Group NV |
| Sumitomo Mitsui Financial |
ING Group and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Group and Sumitomo Mitsui
The main advantage of trading using opposite ING Group and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Group 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.| ING Group vs. Natwest Group PLC | ING Group vs. HSBC Holdings PLC | ING Group vs. Banco Santander SA | ING Group vs. UBS Group AG |
| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. HSBC Holdings PLC |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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