Correlation Between OppFi and Sumitomo Electric
Can any of the company-specific risk be diversified away by investing in both OppFi and Sumitomo Electric 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 OppFi and Sumitomo Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OppFi Inc and Sumitomo Electric Industries, you can compare the effects of market volatilities on OppFi and Sumitomo Electric 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 OppFi with a short position of Sumitomo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of OppFi and Sumitomo Electric.
Diversification Opportunities for OppFi and Sumitomo Electric
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OppFi and Sumitomo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and Sumitomo Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Electric and OppFi 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 OppFi Inc are associated (or correlated) with Sumitomo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Electric has no effect on the direction of OppFi i.e., OppFi and Sumitomo Electric go up and down completely randomly.
Pair Corralation between OppFi and Sumitomo Electric
Given the investment horizon of 90 days OppFi Inc is expected to generate 35.8 times more return on investment than Sumitomo Electric. However, OppFi is 35.8 times more volatile than Sumitomo Electric Industries. It trades about 0.18 of its potential returns per unit of risk. Sumitomo Electric Industries is currently generating about 0.09 per unit of risk. If you would invest 322.00 in OppFi Inc on September 5, 2024 and sell it today you would earn a total of 446.00 from holding OppFi Inc or generate 138.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OppFi Inc vs. Sumitomo Electric Industries
Performance |
| Timeline |
| OppFi Inc |
| Sumitomo Electric |
OppFi and Sumitomo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OppFi and Sumitomo Electric
The main advantage of trading using opposite OppFi and Sumitomo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OppFi position performs unexpectedly, Sumitomo Electric 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 Electric will offset losses from the drop in Sumitomo Electric's long position.The idea behind OppFi Inc and Sumitomo Electric Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sumitomo Electric vs. OppFi Inc | Sumitomo Electric vs. Fortinet | Sumitomo Electric vs. Brera Holdings PLC | Sumitomo Electric vs. MetLife |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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