Correlation Between Sumitomo Mitsui and EBay
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and EBay 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 EBay 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 eBay Inc, you can compare the effects of market volatilities on Sumitomo Mitsui and EBay 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 EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and EBay.
Diversification Opportunities for Sumitomo Mitsui and EBay
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sumitomo and EBay is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and EBay go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and EBay
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 0.7 times more return on investment than EBay. However, Sumitomo Mitsui Financial is 1.42 times less risky than EBay. It trades about 0.48 of its potential returns per unit of risk. eBay Inc is currently generating about 0.04 per unit of risk. If you would invest 7,021 in Sumitomo Mitsui Financial on August 26, 2024 and sell it today you would earn a total of 1,243 from holding Sumitomo Mitsui Financial or generate 17.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. eBay Inc
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| eBay Inc |
Sumitomo Mitsui and EBay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and EBay
The main advantage of trading using opposite Sumitomo Mitsui and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.| Sumitomo Mitsui vs. Fras le SA | Sumitomo Mitsui vs. Clave Indices De | Sumitomo Mitsui vs. BTG Pactual Logstica | Sumitomo Mitsui vs. Telefonaktiebolaget LM Ericsson |
| EBay vs. HDFC Bank Limited | EBay vs. Paycom Software | EBay vs. SVB Financial Group | EBay vs. Sumitomo Mitsui Financial |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |