Correlation Between Sumitomo Mitsui and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Automatic Data 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 Sumitomo Mitsui and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Financial and Automatic Data Processing, you can compare the effects of market volatilities on Sumitomo Mitsui and Automatic Data 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 Sumitomo Mitsui with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Automatic Data.
Diversification Opportunities for Sumitomo Mitsui and Automatic Data
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sumitomo and Automatic is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and Sumitomo Mitsui 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 Sumitomo Mitsui Financial are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Automatic Data go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Automatic Data
Assuming the 90 days trading horizon Sumitomo Mitsui is expected to generate 1.71 times less return on investment than Automatic Data. In addition to that, Sumitomo Mitsui is 1.48 times more volatile than Automatic Data Processing. It trades about 0.08 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.21 per unit of volatility. If you would invest 5,270 in Automatic Data Processing on September 1, 2024 and sell it today you would earn a total of 2,386 from holding Automatic Data Processing or generate 45.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.4% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Automatic Data Processing
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Automatic Data Processing |
Sumitomo Mitsui and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Automatic Data
The main advantage of trading using opposite Sumitomo Mitsui and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Sumitomo Mitsui vs. Fras le SA | Sumitomo Mitsui vs. Western Digital | Sumitomo Mitsui vs. Energisa SA | Sumitomo Mitsui vs. Clave Indices De |
| Automatic Data vs. Fras le SA | Automatic Data vs. Western Digital | Automatic Data vs. Energisa SA | Automatic Data vs. Clave Indices De |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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