Correlation Between Procter Gamble and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Sumitomo Mitsui.
Diversification Opportunities for Procter Gamble and Sumitomo Mitsui
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Procter and Sumitomo is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble 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 Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Procter Gamble and Sumitomo Mitsui
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.63 times less return on investment than Sumitomo Mitsui. In addition to that, Procter Gamble is 1.06 times more volatile than Sumitomo Mitsui Financial. It trades about 0.06 of its total potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.1 per unit of volatility. If you would invest 1,469 in Sumitomo Mitsui Financial on November 18, 2024 and sell it today you would earn a total of 44.00 from holding Sumitomo Mitsui Financial or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Procter Gamble |
| Sumitomo Mitsui Financial |
Procter Gamble and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Sumitomo Mitsui
The main advantage of trading using opposite Procter Gamble and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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