Correlation Between Sumitomo Mitsui and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and DXC Technology 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 DXC Technology 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 DXC Technology, you can compare the effects of market volatilities on Sumitomo Mitsui and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and DXC Technology.
Diversification Opportunities for Sumitomo Mitsui and DXC Technology
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sumitomo and DXC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and DXC Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and DXC Technology go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and DXC Technology
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 1.04 times more return on investment than DXC Technology. However, Sumitomo Mitsui is 1.04 times more volatile than DXC Technology. It trades about -0.01 of its potential returns per unit of risk. DXC Technology is currently generating about -0.22 per unit of risk. If you would invest 8,924 in Sumitomo Mitsui Financial on November 6, 2024 and sell it today you would lose (62.00) from holding Sumitomo Mitsui Financial or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. DXC Technology
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| DXC Technology |
Sumitomo Mitsui and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and DXC Technology
The main advantage of trading using opposite Sumitomo Mitsui and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. Ameriprise Financial | Sumitomo Mitsui vs. Sony Group |
| DXC Technology vs. Charter Communications | DXC Technology vs. Metalrgica Riosulense SA | DXC Technology vs. United States Steel | DXC Technology vs. Melco Resorts Entertainment |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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