Correlation Between LIFEWAY FOODS and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS 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 LIFEWAY FOODS and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and Sumitomo Rubber Industries, you can compare the effects of market volatilities on LIFEWAY FOODS 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 LIFEWAY FOODS with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and Sumitomo Rubber.
Diversification Opportunities for LIFEWAY FOODS and Sumitomo Rubber
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between LIFEWAY and Sumitomo is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS 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 LIFEWAY FOODS 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 LIFEWAY FOODS 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 LIFEWAY FOODS i.e., LIFEWAY FOODS and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and Sumitomo Rubber
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 1.38 times more return on investment than Sumitomo Rubber. However, LIFEWAY FOODS is 1.38 times more volatile than Sumitomo Rubber Industries. It trades about 0.16 of its potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about 0.1 per unit of risk. If you would invest 1,680 in LIFEWAY FOODS on September 2, 2024 and sell it today you would earn a total of 600.00 from holding LIFEWAY FOODS or generate 35.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFEWAY FOODS vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| LIFEWAY FOODS |
| Sumitomo Rubber Indu |
LIFEWAY FOODS and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and Sumitomo Rubber
The main advantage of trading using opposite LIFEWAY FOODS and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS 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.| LIFEWAY FOODS vs. SIVERS SEMICONDUCTORS AB | LIFEWAY FOODS vs. Darden Restaurants | LIFEWAY FOODS vs. Reliance Steel Aluminum | LIFEWAY FOODS vs. Q2M Managementberatung AG |
| Sumitomo Rubber vs. Bridgestone | Sumitomo Rubber vs. The Goodyear Tire | Sumitomo Rubber vs. Zeon Corporation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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